The entrepreneur is that endless challenge seeker. Once their small business is humming along, growth is the next exciting challenge.
Exciting, yes - but at the same time growth can make good business sense - better 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. You will need 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 will need to 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 that 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, and building a business dynasty for not just your family, but for other families in your community as well, are a great reason for growth. Growth of a business, especially in a small community, can be seen as community economic development.
2. Build business value by dominating a market niche.
Business growth may garner your business the advantage it needs to be a leader in 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 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.
Employees are the new "green" in business, and the excitement of growth offers the potential for career challenge that inspire skilled employees. Growing businesses offer change and the need to acquire new knowledge - both 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 get others to follow. As you build your resume financiers will take you more seriously, though they may consider you more 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 contributes to having more money for R&D, sponsorhips, employee training and education, investment in new technology and creating more productivity out of employees.
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.