3 Signs that You Are Ready to Grow Your Small Business
In the article “Five Signs You’re Ready To Grow Your Small Business” by Matthew Podolsky published on Forbes.com, Mr. Podolosky highlights five signs that you are ready to grow your small business.
With all respect to Mr. Podolsky, we would argue that there are really 3. If you wait to grow your business until all of Mr. Podolosky’s criteria are met, you may be beset with other problems. Therefore, these problems could cause Mr. Podolsky’s criteria never to be met.
Our 3 signs that you are ready to grow your small business are when:
Demand is consistently high and expected to be for the foreseeable future
On this point, we agree. The demand for your business needs to be strong, and the local trends in your market should also indicate that this demand will continue before you are ready to grow your small business.
We recommend using industry projections with caution. While industry projections as a whole can be helpful, they are usually national in scope. Therefore, they can be of limited use. In other words, make sure your local demand is strong before growing your small business.
In general, small businesses are affected most by local trends. Local trends can vary significantly from national trends. For example, there is a national shortage of doctors. However, this is not the case in New York City, where there is a surplus in some specialties. In this case, relying on a national trend would guide you in the wrong direction.
The business is profitable
While having 3 years of profitability would be great, you will likely start to plateau if you wait that long to grow your small business.
Small businesses are typically limited by people. Once they hit their maximum, they can actually become less efficient. So, each new customer is a little less profitable than the last because they are paying overtime, etc. Or, each new customer is a little less satisfied because quality starts to suffer due to burnout, etc. After than, growing your small business is more challenging.
If demand is high and you are profitable, it probably isn’t best to wait 3 years to grow your small business.
You can expand the business with minimal disruption to your current business
In the real world, we know of very few small business owners who would say the “business could run without them” or “their schedule is pretty open”. On these points, we disagree the most.
If your schedule is pretty open, then demand isn’t likely to be high. In this case, focusing on driving demand is probably more important than trying to expand your small business.
Most small business owners wear multiple hats. Therefore, it is often necessary to grow your small business in order to hire the staff so the business can start to run without you.
The key is to grow your small business without significant disruption to your current business due to distraction, inattention, or the like. This is usually the most difficult point, and where we’ve helped many businesses manage this process.
You Are Ready to Grow Your Small Business When…
In summary, we believe that you are ready to grow your small business when
- Demand is strong and consistent
- The business is profitable, and
- It can be done with minimum disruption.
Importantly, having a plan in place so you are ready to grow your small business is something that we believe all small businesses should do. Why? Because, if you wait until you are growth before you plan, it can create a number of avoidable headaches. In other words, “If You Don’t Plan for Growth Now, You’ll Hate Yourself Later”. In that post, we explain those headaches in more detail.
We’ve helped a number of businesses determine when they were ready to grow their small business. If you are facing similar challenges, please contact us. We’d love to show you how we can help.