How to Know When the Time is Right to Expand Your Business

While there are a few specific business types (most often on the smaller side of things) that can truck along doing a steady trade indefinitely, this is not the case for the vast majority of businesses out there. To wheel out a somewhat tired item of figurative language, businesses are like sharks – they need to be constantly moving forward or they will die.

However, it should not be a cause for massive alarm if your company does not seem to be going from strength to strength in leaps and bounds. Of course, businesses can find their feet at curtain size for a while without visibly growing. Nevertheless, if you do not plan for the future – or at least have some perspective plans for growth – then your market niche will not stay yours for very long.

The Danger of Expanding too Quickly

Believe it or not, there is actually some such thing as expanding too quickly or doing so before the time is right. And not only that, but the consequences of doing so can be disastrous in some instances.

For one thing, aggressive expansion can lead to losing track of finances. When a business is smaller it is easy to keep track of ingoings and outgoings, but if it expands rapidly without the requisite expansion of finance duties and staff, things can very quickly get out of hand. This can lead to a business infrastructure you cannot afford. Expanding at the right time, when you have a clear idea of just what else you have to do to facilitate the growth, is the right way to do it.

How to Tell When the Time is Right

So, how can you be 100% sure that the time is right to expand? There can be a number of indicators, but the following prerequisites should certainly all be met before you begin to expand:

You Have Perfect Cash Flow

In many ways, cash flow is even more important than profits. FastFACTR, an invoice factoring company out of Salt Lake City, Utah, advises that you see profit as a reflection of the success of your sales, and cash flow as a reflection of your ability to meet all your financial obligations and unexpected costs. You will know you have an inadequate cash flow if you are ever waiting for money to “come in” before you can clear expenses. If this is ever the case, you should sort your cash flow problems before deciding to expand (as well as make sure there will not be any cash flow problems after you have expanded).

You Have Regular Customers

Before you are ready to expand, you need to make sure you have a reliable customer base. This means that you always have at least a set number of customers at all times. This is a great indicator that your business is operating at the capacity currently afforded by its current size – meaning that it is time to expand

You Have Regular Profits (That Seem to Max Out)

If you have month-on-month, year-on-year profits, then chances are your business has the potential to grow. This is especially true if they seem to be remaining steady at a certain ceiling figure. This means you are easily selling out whatever you are offering, and it’s time to offer more.

Ultimately, the decision to expand will involve several more considerations than just those laid out here but crossing off these prerequisites is a great way to start and to check if the time really has come.