United States
Updated: March 27th, 2020
Whether your business is well-established, still in the startup stage, or somewhere in between, it’s critical to plan for growth. When you expand your business, it always involves risk, but it also has the potential to pay dividends. Knowing how to take your business to the next level can help you attract customers, increase profits, and cement your place in your industry.
“It’s important to always be strategizing about new growth opportunities, both for pure growth, but also to recover in the event that there are customer losses,” said Deborah Sweeney, the former CEO and current vice-president of business registration services at MyCorporation.com.
Preparing for growth can also help you achieve your goals more quickly. Companies that focus on growth don’t wait for opportunities — they create them, said Rob Stephens, a CPA and the founder of CFO Perspective. “They build relationships that bring them deals. They gather the resources they’ll need to quickly deploy when the time is right,” he said.
Keep in mind, though, that “Growth doesn’t necessarily mean bigger. It means evolving in a constantly changing market,” Stephens said. The steps for how to take your business to the next level could involve:
Excited to level up? Here are five signs you’re ready.
A steady influx of customers or clients is a good indication that your business can handle more growth. “When you have found your groove and are flowing with your current customers in your current business,” Sweeney said, “start expanding.” Instead of relying solely on anecdotal evidence, though, crunch the numbers.
Start by reviewing your sales to see how many repeat customers you serve each month and how many new customers you attract. These figures will give you a better idea of how sustainable your business is, as well as how effective you are at turning new customers into loyal fans. You may even want to ask your sales team or customer service representatives to share any feedback your customers provide, whether positive or negative, so you can learn what works and what doesn’t.
Next, check out your business’s online reviews to gauge how satisfied customers are. You can also evaluate your business’s social media engagement levels and use Google alerts to stay up to date on the news about your business. Positive online buzz suggests your business isn’t just relevant; it’s also well-liked.
Before you can push for growth, it’s crucial to examine your business’s finances. Though there are numerous areas to evaluate when considering if it’s time to expand your business, the most critical factor to consider is profit, said Jessica Chase, a sales and marketing manager at Premier Title Loans. To figure out if your earnings exceed your losses, review your income statement, cash flow statement, and balance sheet.
“If your profit margin is stable for at least a year, then it is time to work on more orders and to grow your team,” said Chase. However, if your profit margin fluctuates, work on pinpointing the minimum amount of profit your business has had over the past year. If you can still meet business costs and keep employees happy with that number, Chase said, then you can probably handle expansion.
Profit isn’t the only factor that matters. However, when taking your business to the next level. In fact, if your business has had the same amount of profits for multiple years — even if those profits surpass your losses — you may have hit a plateau. That’s why it’s critical to look at revenue and sales, too.
A history of accurate forecasting and steadily increasing revenue or sales shows your business’s growth thus far has been sustainable. If you’re profitable and you have strong sales forecasts for the next six months to a year, you’re in a better position to accommodate the costs of expanding your business.
As your goals change, so will your plans for when to expand your business. You may want to develop a new product line after seeing success with a trial product, for example. Or, maybe you’re shifting your marketing approach after the collapse of your primary distribution channel.
Whatever the case, growth can help support your business goals, Stephens said, but only if you have the energy and time to commit to a new endeavor. “Some owners would prefer to reap cash from current operations rather than invest that cash and their time into growth,” he said.
Before you make changes, spend some time defining your goals and outlining the steps it will take to achieve them. Next, take stock of your resources, finances, and schedule. If you determine that purchasing a new customer relationship management system or hiring an administrative assistant will help you better execute your plans, then it may be a worthwhile investment with your time and money.
One telltale sign your business could benefit from the expansion is if you have too much work to manage. You might run out of inventory regularly, for example, or have to turn down exciting project offers because you’re too busy. Or, your employees could be consistently working overtime, while you struggle to manage multiple roles as the business owner.
In general, “Having more demand than you can handle shows that market demand is solid,” Stephens said. However, there’s a thin line between high market demand and ineffective management.
“If you can’t handle your current volumes, then growth is just going to compound your problems,” Stephens said. Before you commit to a strategy for how to take your business to the next level, you need to audit your business’s backend systems to see if you’re being as efficient as possible, he said.
In addition to evaluating key performance indicators (KPIs) to see whether or not employees are productive, you should also review the last six months of sales or service requests to know if you’re taking on more orders than usual. Finally, check-in with your employees and ask if they feel overextended at work.
If the answer is yes, and if you’re still hitting KPIs and staying on track with shipments and payments, then you may have a case of growing customer demand.
You can’t base taking your business to the next level solely on your wants — you need to make sure the market is healthy enough to support expansion. Before you build a new product or open a store in a new city, do your homework.
“Pick a sales channel or section of the market to test price or product changes,” Stephens said. “You can get qualitative information from market research and testing.” Reviewing purchase trends and predictions will give you a better idea of whether or not there’s a demand for your products or services.
It’s also helpful to listen to customers and clients. “If your clients are happy, but you have started receiving more requests to offer more industry-related services,” Chase said, then you may want to consider expanding. Just make sure you estimate the resources and costs involved in adding a new service or product to your business first, she said.
Considering “how to take my business to the next level” isn’t a one-time decision. To set yourself up for long-term success, you need to incorporate growth into your business’s philosophy and day-to-day processes.
“As you make more profit and identify what works and what does not keep reinvesting in what is making that growth happen,” Sweeney said, “and cut back on those initiatives that are not proving as lucrative.”
Testing different strategies and evaluating your efforts is key to ensuring your business doesn’t fall behind. “Identify levers that you can pull all the time,” Sweeney said, “so you don’t need to make a single growth decision.”
If you want to propel your business forward, consider your options. A business loan can give you the financial freedom and flexibility for when it’s time to expand your business and to take on a significant growth project or transition into a new stage with ease. Learn more about Funding Circle’s term loans or apply today.
Paige Smith is a content marketing writer who specializes in writing about the intersection of business, finance, and tech. Paige regularly writes for a number of B2B industry leaders, including fintech companies, small business lenders, and business credit resource sites.
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