Expanding Your Business? Ignore These Pitfalls at Your Peril
When a business owner thinks about expansion, life gets exciting. But a path of missteps awaits the entrepreneur who doesn't think it through beforehand.
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Once a certain degree of business success has been achieved, it's easy to feel ready for the challenges -- and benefits -- of further growth. But there are many factors to consider: what business formation might be best, which solutions will match your businesses structure and how to make the right moves to sustain growth without throwing cold water on it.
Growing your business the wrong way is obviously not the best course of action -- yet that's what happens every day. Slow, incremental growth can keep you from serving a customer segment begging for your product. Explosive growth may leave your existing market feeling lost as it tries to navigate a forest of new products.
Even large, established businesses can discover how expansion can become a company's death knell if handled poorly. Radio Shack, Best Buy, Target and Disney each suffered when they didn't adequately plan for expansion.
American environment advocate Edward Abbey once said, "Growth for the sake of growth is the ideology of the cancer cell." At least for a business, potential damage from unplanned and uncontrolled growth can be mitigated by avoiding the following mistakes.
Offering a shoddy loyalty program.
While not practical for business startups or initial coming-to-market scenarios, a loyalty program offered by a business ready for expansion may pay off in improved customer loyalty and satisfaction. Just make sure the deal is affordable and that time and resources are available to manage it.
Not being able to devote the right resources to the program means failure before launch. To solve this problem, many small and medium-size businesses contract with rewards apps like Perkville or FiveStars. Both apps, like your existing sales system, can be formatted as a unique loyalty program that won't adversely impact current initiatives.
Hiring in haste.
While hiring new staff can alleviate stress and provide room to focus on vital details, there is a downside. Training new hires brings a transition that could hinder overall productivity for a spell. Hiring is a costly move, so the idea should be weighed carefully before starting a new-employee search.
If you've done due diligence and still decide additional staff is the right step, there are some must-dos to avoid killing the business. Keep a list of tasks for a new employee to assume and look for ways to assign them to them. Especially important for a small business is making sure the right person for the job has the right disposition as well as the right skill set. The attitude and work ethic of one person can change (for better or worse) the atmosphere of your overall operation.
Opening new locations.
Often the most risky thing entrepreneurs think of when they speak of business expansion is opening a new location. Expansion through brick-and-mortar locations demands an abundance of thought, preparation and planning.
Not managing the competition or failing to be hyper-aware of your budget can lead to failure. Street and foot traffic at a new location must be evaluated, and proper staffing is essential.
Not realizing that all business formats do not succeed by adding locations can be a dream killer as well. Carpet installation, car repair and other industries with plug-and-play skills can work from multiple locations. But businesses where the product demands hands-on attention from staff or where a service provider does all the billable work do not.
Ignoring cybersecurity measures.
Almost all small to medium-size businesses have an online presence. That makes them automatically at risk of a cyber-crime attack, which, if unprepared for, can turn a business expansion into a nightmare. Try to imagine what your business would be like without telephones, the internet or computers -- for a whole week.
Quality security software helps, but the owner must account for human error as well, especially when receiving or sending emails. Make sure each of your employees is trained in recognizing a fake or malicious email and that they know not to open one.
Despite your best efforts, cyber crooks continually look for new ways to hack systems and bust through firewalls. Constant vigilance is key. Utilizing a service like cyber-protection insurance helps ensure internal security policies are updated as the business expands.
Failing to diversify.
Successful businesses adapt. Savvy companies anticipate. Market changes can force a business out of its niche. Diversifying into complementary lines and services help can grow it by introducing new streams of income. Expand beyond your target market, and your financial success may be more likely to happen.
Failing to partner up.
To expand your base, consider partnering with another business that has a similar target customer. For instance: an owner of a fitness studio might think about partnering with a nearby sporting goods store to create a unique package for their health-minded customers. The possibilities for cross-promotion are unlimited, from discounts to buy one/get one deals.
It doesn't matter if your expansion is a small baby-step or a giant leap, strategic planning is required because growth can kill or boost your business. No single method guarantees overnight success, but the right strategy blended with the right mindset will grow your business and position it for the future.