The successful entrepreneur is an endless challenge seeker. Once a small business is humming along, growth is the next exciting challenge.
Exciting, yes — but at the same time, growth can make good business sense — increasing brand recognition, building value in the business for employees and customers, offering a wider range of products and services to a larger geographical market, and creating "economies of scale".
Rationalizing the rewards of a bigger business means tuning up your business plan writing skills again. It's time to update those spreadsheets, recraft your marketing plan, and strategize an expansion implementation plan.
You will also need to carefully weigh the risks and rewards for growth. Some of the steps in your analysis are outlined in this section. Your lawyer and accountant should be consulted. Perhaps you don't have to figure everything out from scratch. Look to a business in your industry for best practices and draw on knowledge of others who have gone before you.
The Case for Growth: Gaining a Business Advantage from Expansion
1. Build a family dynasty and grow community self-sufficiency.
Family pride, job relevance for family members, creating community employment, and building a business dynasty are great reasons for planning for growth.
2. Build business value by dominating a market niche.
Business growth may garner your business the advantage it needs to be a leader within a market niche. You can move into new geographic markets, acquire more customers, or provide the next level of service to your present customers — perhaps, a service that they have been asking you for. Growing your brand brings value to your business and quality to your customers. Both are important in creating goodwill in the marketplace.
3. Attract and retain good employees.
The excitement of growth offers the potential for career challenges that inspire skilled employees. Growing businesses offer change and the need to acquire new knowledge — something that younger employees seek and the global economy demands.
4. Land the major clients that in turn lead to more financial support from lenders.
Landing a major client or contract can give your business the cachet that it needs to incent others to follow. As you build your resume, financiers will take you more seriously, though they may consider your business to represent a greater risk too. Your larger size will increase your marketplace presence and strength.
5. Achieve economies of scale.
The age old concept in business is economies of scale. This means that bigger businesses achieve lower costs per unit and stretch administration dollars over a larger product line: marketing, professional fees, insurance and banking charges, to name a few. This economy of scale can result in more money for R&D, sponsorships, employee training and education, investment in new technology, and reaping greater employee productivity.
This is not an exhaustive list — your analysis will uncover many other rewards associated with your particular business expansion. The next section will discuss the various expansion risks.