Figuring out whether or not to expand your business is tough. Here are some questions to consider when you’re making up your mind so you can feel confident about your decision.
It’s a dangerous trap to think that if your company isn’t expanding it isn’t succeeding. All too often when a company starts to get busy and money seems to be flowing in business owners can’t help but going all out to take advantage of the sudden windfall. They buy new trucks, hire new contractors, expand their territory, and (in some cases) spend all this money only to see the wave of business come to an abrupt halt, leaving business owners with less money and more expenses than they had when they started.
At the same time, it’s just as dangerous for business owners to be afraid of the risks involved in expansion and choose instead to stay a steadily busy company that’s passing up opportunities for more business and long-lasting customers left, right, and center.
Being able to identify the right moment to grow your company and the right moment to stay the course is something business owners have always had trouble with, but with these helpful tips you’ll be able to guide your business in the best possible direction through everything that comes.
What Kind of Business Are You Doing?
Sounds obvious but a busy schedule doesn’t always mean a huge payout. If your plumbers are filling their week with declogging jobs and shower head replacements you’re going to seem very like you’re getting a ton of work but you won’t be bringing in the type of money needed to start planning a big expansion. Keep a close eye on how many jobs you’re doing every month, how much total money is being brought in, and how much money went out (to advertising, leads, expenses, etc.) to see whether you’re experiencing a busy period or a profitable period.
If it turns out you aren’t pulling in as much profit as you first thought don’t be discouraged! Staying busy and getting your name and work quality seen are never bad things. Plus, every customer you work for today could prove to be a reliable repeat customer moving forward and could refer you to all their friends as well!
What Kind of Business Are Your Losing?
During particularly busy seasons, there are going to be a handful of leads that you simply can’t act on. While you should always try to minimize these lost leads, you should also take the time to review them. If you’re missing out on promising leads for highly profitable jobs, no matter what you’re busy doing then you need to consider an expansion.
Contractors all across the country end up making short-sighted decisions when they start looking into the leads they’re letting slide by and take on too many jobs for the crew they have available. Make no mistake, doing this will lead to a decrease in quality and will end up hurting your business in the long run. When you start choosing between the quality of your work or the quantity of your work it’s time to look into expanding to get the best of both.
What’s to Be Gained?
Expanding your company isn’t a simple “yes or no” decision. There are a variety of ways to grow a business from hiring new staff and opening a new office to getting training for new service options.
In order to make the most from your business growth, it’s crucial to understand which expansion options will provide the best results for you. In the months leading up to an expansion carefully assess where your company is really excelling and invest in growth which will make that strength even stronger.
What’s to Be Lost?
Every business decision you make will cost you time and money. Good business decisions will make sure that that time and money earns you time and money moving forward. Consider before you make your steps toward expansion how much of your time and money will be used in the process and honestly assess if it will be worthwhile.
If, for example, you hire on a new crew, finance a new truck, and equip them both with new tools, do the math out to determine how much you’ll be spending and project your profit out to see how long it will take to make that investment back. If it really doesn’t seem like you’ll make money by spending money right now then now might not be the right time to expand.