When we decide to open a business we have several objectives in mind to achieve, we want financial security for ourselves, for our children, family members, we want to be recognized, we want to expand the business and leave our mark on the world.
But the most important thing is to transform objectives into goals and these into achievements.
When it comes to expanding a company, it is perfectly natural to think, the business is consolidated and it is time to grow, however, it is perfectly natural that it is not the time yet, for that reason, below we present tips to consider before making the decision to expand your business and the right time to do so.
The expansion of a company's business can be defined as a set of strategic decisions that aim to diversify and expand an organization's business, instead of focusing only on the operational part of it. This could be through the opening of another unit (store, office, clinic, restaurant), a franchise, or a presence on the Internet.
WHAT TO CONSIDER BEFORE MAKING THE DECISION TO EXPAND?
First: toda tomada de decisão deve ser no sentido de gerar resultado positivo.
If you have a company in a certain place that manages to generate revenue, it is because there are factors that contribute to the success of that enterprise: the product mix, communication, culture, employees, the favorable environment of the sector in which it operates and the general environment of the economy.
Expanding the business to another place, for example, means exploring another market, in this context you have to evaluate the 4P's (Product, Price, Place, Promotion) to create your business strategy, because this second location of the business may not share the same strategies from the first, simply due to the difference in the market.
Second: It is important to create strategic reserves in order to maintain the company in times of crisis. The company survives on cycles, there are times when it makes a profit and others when it makes a loss.
WHEN IS THE RIGHT TIME TO EXPAND?
We present some indicators that should be observed.
External indicators
1. Customer loyalty: this aspect can be measured through a solid base of frequent customers. When customers come to the company instead of the company looking for them, that is, when there is a demand that justifies a greater offer;
2. Growth requests: when customers frequently comment that you should open a branch or operate in other locations, or when you become aware that there are customers who travel long distances to purchase a product or service from your company;
3. Profit for the last three years: the fact that your company has recorded a recent profit is not enough to justify an expansion, however, a continuous and stable profit over the last three years is a clear sign that the business is doing well and can be expanded;
4. The growth of your field of activity: if your company operates in a sector that is growing, it is very likely that it will also grow;
Need for additional or complementary products and services: if sales are going well, it might be a good time to diversify the line of products or services that your company offers, to serve your customers more comprehensively.
Internal indicators
A tuned and motivated team: reflect on whether your team is prepared to carry out the additional work that will lead to expansion, whether they are proactive, capable of taking on increased responsibilities;
Finances in order: expanding operations costs money, you need to have your company's finances under full control and also keep in mind that profit from expansion may take time, meaning you will need to guarantee the funds to run your company until that happens;
The amount of work: are you often unable to serve new customers? Does the team work intensely for long hours a day? Assuming these aspects are not caused by poor time management.
Conclusion
If you have observed several of these indicators, it is very likely that it is time to expand your business, all you have to do is find out if the expansion is really viable.
Growing a business can be challenging, but it can also be incredibly rewarding. Counting on a consultancy like ACGEST can help identify new growth opportunities, minimize risks and maximize profits.
Get in touch with us and discover your options.