Do you feel like your business is heading in the right direction and your hard work is paying off? It might be the perfect time to seize the opportunity and dive into expanding your small business - a new phase that comes with its own set of challenges and risks. Here is how to find out if your company is ready to grow.
Small businesses are the backbone of the Australian economy and way of life. According to the Small Business statistics report of 2019
, small businesses account for a whopping 98% of all businesses in Australia. Employing more than 2.2 million people in all of Australia, small businesses are crucial to the country’s workforce. Unfortunately, over half of all small business owners earn a wage far below the average Australian’s - the ATO finds a commonly reported annual income of $0-$25,000.
However, this isn’t all businesses. Some prosper and continue to expand until they employ up to 200 people. Some even become part of the 0.2% of large businesses with over 200 employees. Now, doing well alone is never a green light for rapid and reckless expansion. Many businesses have made this mistake, and it’s always hard to recuperate the losses made.
Who can forget the Doughnut Time debacle
from 2018? Damian Griffiths, the former lawyer and founder of the Brisbane-based dessert business, was forced to sell the company to the former CEO and managing director, Dan Strachotta after the business went into liquidation.
How to Scale Up Without Screwing Up
What went wrong? In the previous two years before it’s demise, the business was appearing to boom. Griffith, enthusiastic at the time, explained, "We are going to keep opening stores where we think there’s demand. We have plans to head over to Perth and we want to take the brand international. We live for challenges so it will be interesting to see where the next 12 months take us.” Unfortunately, due to rapid expansion, they lost track of expenses: Unpaid debts to the ATO, unpaid rent, underpaid and even unpaid employees, and emerging lawsuits ruined the company. Griffith realised his mistakes and quickly accepted blame. " I expanded too quickly,” he told Broadsheet. Ultimately, seven out of thirty stores remained.
This should teach you a lesson: Before you’re diving head over heels into your expansion plans, have a look at the overall context. Think about customers, locations, and employees, less money. Ok, ok - money is obviously a huge factor, too. But we will get to that in a moment’s time.
So, what are the tell-tale signs to look for that show your business is really ready to expand?
1. You Have More Business Than You Can Handle
Can’t keep up with your orders? Do people keep running in the doors of your business? If you consistently have an overwhelming amount of sales across the year, you might have more business than you can handle, leaving your customers short-changed and overwhelming your employees.
If you’re constantly struggling to keep up with your workload, it may be about time to employ extra helpers and find a bigger space. Expanding the business can help you meet the high customer demand you’ve been struggling with. It, however, doesn’t mean that you should start expanding right away: The emphasis is on consistent, sustained demand, independent from holidays and special events. Because having one crazy month or two, doesn’t guarantee continued sales over the rest of the year.
Not great at checking over your sales and expenses? Get a bookkeeper to help keep track of all costs and income. Bookkeepers can provide you with records of your incoming and outgoing expenses and let you know how you’re doing. The Shoebox Books team can help you find a bookkeeper
from almost anywhere around Australia.
2. You’re Running Out Of Space
Is it getting crowded at work? If there is no room left for stock, staff, or customers to freely move around without bumping into each other, you’re physically running out of space. Cramped and cranky is never a great combination when it comes to keeping people happy, be it employees or paying customers. It might be time to expand the business in a very literal sense and secure a place with greater square footage.
3. You Have a Solid Team Behind You
Ask yourself: How invested is your current team in the success of the company? Is everyone on the same page in terms of where the future will lead the business? Are they willing to work hard and put in extra hours in order to take it to the next level? If you’re not convinced this is the case, we highly recommend you to take the time and put the right team in place. Adding even just a few experienced, skilled and highly motivated staff members, can help the whole team navigate expansion waters.
Your company is growing - and that’s awesome. Before adding to the team, you may want to examine the current workflows and requirements. Where are your biggest hiring needs? Do you need more salespeople, or does your existing team simply need an assistant to take on administrative tasks? Can the one-woman marketing team handle the company’s sudden growth? Strategic hires
will put the right people in place and get your company on the route for expansion.
4. You Have A Plan For Growth
Sometimes the best plan is not having a plan. But in actuality, there is little room for spontaneity in the business world. What works for recent college graduates on the hunt for a sense of purpose in life, could quite possibly end up ruining your business. Having a detailed plan for expansion, including short- and long-term goals and a map for how to get there will give your company the best chances of success.
The key themes of every great business expansion plan
? A market analysis, strategy, organization and management, daily operations, financial history and financial plans and projections. Think to yourself, have I covered all my bases?
5. You’re Constantly Smashing Goals
You’ve set your business goals and met them all? If you’re reaching all of your milestones and are reaching them early, being constantly ahead of your own expectations, it might be time to aim a little higher. Not sure how your business performed overall? Have a look at the data. If you set up actionable goals, you should be able to look at the correlating data to see how your company performed. As you’re planning ahead for the expansion, keep the big picture in mind. Where do you want to take your company over time? Having big goals will help to keep you on your toes.
6. You’re On Top Of Your Money Management
To avoid losing track of your expenses and debts and to be able to rectify the situation when things are going wrong, you can’t stick your head in the sand and hope the problem will magically dissolve into thin air.
Keeping track of the accounting records for each business location is essential to the successful implementation of your growth plans
. We recommend that you keep separate books in order to allow the monitoring of each location’s health. By doing so, it will immediately become clear if a branch is not profitable and you can attempt to fix current problems before opening up a new construction site.
Depending on the structure of your business, you may also be required to have separate records for tax purposes. If that all makes your head spin, fear not: Our team of expert bookkeepers is here to take the stress out of book work and allow you to focus on growing your business. We’ve also incorporated tax services for your convenience! Should you be in need of an experienced bookkeeper or tax accountant, get in touch with us
today, for a free consultation.
7. You’ve Got The Financial Resources
Expanding a business is expensive and always involves certain risks. They are however identifiable factors that can be managed. Consider how you will fund your expansion before taking any drastic steps. Do you have enough positive cash flow and capital to fund growth? Speak to your bank or investors to discuss the potential scale of your expansion. Worst comes to worst, you may need to adjust the timeline or overall path of your expansion - which is still better than risking bankruptcy.
As a business owner, you’ll sooner or later experience your first setback
and professional challenges. When it happens, don’t dwell on it, act on it.
8. Your Industry Keeps Growing
should play a huge role in your expansion plans. Do your research thoroughly. How’s your industry going as a whole? Have you noticed a booming interest? Are you a big fish in a small pond or vice versa? Who are your key competitors? And most of all, speak to people who have done it before and learn from their experiences. An overly saturated market makes expanding riskier; however, if you’re fairly ahead of the trend in your field, then growing might set you up to do even better than imagined.
Staying on top of the trends in your industry gets increasingly important as your company outgrows national borders. Customers and regulations are different in every market, in every country – you need to be equipped to deal with the culture of that market, and that means having team members with the right skills for operating in an international environment.
9. You Have Your Customers Support
Word of mouth is the original Social Media
. More powerful than any marketing campaign, consumers trust their friend’s advice above anything else. If people are saying good things about your business, and more customers are seeking you out as a result, then it’s a good indication of your success.
Ask yourself: Do you have regular customers coming in? Are your clients asking about your expansion or telling you that they’d love to be able to access your services or products in other locations? This is a good indication that it may be time to increase production or to open a new shop.
10. You’re Documenting Business Processes
Sammy Blindell, the founder of branding consultancy How To Build A Brand
, says: "Every successful brand has gone through significant growth, and one of the things that supported that growth was a brand culture that included procedural guidelines for every process, from initial consumer contact to client retention.”
Put in a nutshell you may say, that brand strategy guidelines and procedures create a solid ground for the growth of a business
. Sustainable and repeatable processes should be the basis of every business, ensuring that every employee can follow them with confidence. There are a number of processes that are absolutely essential to efficiently running any kind of business, regardless of its size, industry, or location: Think sales guides, client onboarding procedures, customer support guidelines and more.
Should I Expand My Business?
Expanding a business is a welcome challenge for most entrepreneurs. But some business owners prefer to maintain their current level of operations as expansions don’t necessarily yield bigger incomes, and are almost always accompanied by increased expenses. However, business growth isn’t just about revenue or profit. Investing in the training and development of staff is key to the growth of their understanding of the business and their engagement with it, both of which are key to boosting productivity.
When you think it’s time to expand your business, you should carefully consider each and every one of our tips to ensure your company is really ready to level up. If you can tick all of the boxes, it is a good sign your business is en route for expansion. Just keep in mind: Growing a business takes time. It won’t happen overnight. As with so many things in life, it pays to be proactive and take initiative. It’s onwards and upwards from here.
If you fear that a simple spreadsheet will soon not be enough to keep track of your expanding businesses’ bookkeeping, it may be time to consider professional assistance. Don’t hesitate and contact the experts at Shoebox Books today.