When is the best time to expand your business?

 

When is the best time to expand your business?
by James Humarang, M.B.A.

 

As an entrepreneur, it should always be your goal to continuously increase profits. Strategic businessmen set revenue targets per period to gauge not just profitability but also the potential to grow.

No business should be contented at its current market position. After several quarters or years of strong performance, it is a logical goal to further grow the venture to further bolster income.

Do you think your business is on the right track to go into higher gear? Are you considering taking it to the next level? As the owner, you should be able to tell if it is the best time to pursue expansion efforts. Here are the best and most obvious signs that it's time to expand your operations.

 

Demand exceeds production
The business capacity may no longer keep up with the demands of production. Consequently, you may not be able to deliver the right volume of products on time or you may not be able to respond to all your clients’ inquiries. Take this as a good sign for a necessary expansion of your operations. Your business may need to expand land area, add new equipment or open a new facility. It may be coupled with the necessity to hire new personnel.

 

Business landscape is changing
New consumer needs or new widely adapted technology could change the marketplace or the behavior of consumers and consequently, affect your business. You may have to adopt new processes that may only be possible through establishing new operational units. A good example is bringing your business online. If you already have a website, you might consider taking orders and reservations online. As eCommerce gets more popular, the business has to adopt new technologies and ways to be more profitable, and not to mention, efficient.

 

Competition intensifies

There is a need to react appropriately to increasing competition. It is just logical for your rivals to aim to outpace your business. If your competitors are aggressively expanding, there would be a great possibility that they may eventually entice some of your customers. This is why intensifying competition should prompt you to also take the road to improvements and expansion.

 

Growing need for related products/services

After some time, the market may create a need for new products or services that are directly related to what your business offers. You may capitalize on your current market position and cover the new segment. This opportunity may not just bring about greater income potential but also lead to a bigger and more stable market share, as your business can retain its customers and possibly entice more.

 

 

Business expansion must not be taken out of impulse. After determining the need to expand, you should do the necessary market research and craft an operational business plan. Then, you should evaluate your present capacity and financial readiness. If your business can get the access to the resources required, it is time to take the road to expansion.

 

 

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