The Decision to Expand a Business
There are many ways to expand or grow a business, for example, can make it through the opening of new stores, create new sales channels or outlets, direct our products to new market segments, making the decision to export, etc…
But the problem arises when there has been no proper planning, and suddenly the employer is without the resources or capacity needed to sustain this growth.
For example, suddenly no longer has the funding necessary to purchase the goods requested, does not have the capacity to meet the new demand, there is no supply to meet new customers, has no knowledge or experience to meet the new requirements, etc.
Therefore, before deciding to expand or grow a business, it needed a good plan that allows us, among other things, whether we have the resources and capacity needed to maintain this growth.
The expansion plan must identify growth strategies that we will use the investment required to implement these strategies, projected sales and expenses that will be generated with the extension or expansion of business and the products or services we will need to produce and offer.
The first thing that will allow the expansion plan is to verify that the project really is profitable, i.e. that the profits will outweigh the costs to be generated as a result of the implementation of the plan.
The second thing that will allow the expansion plan, will know the resources (financial, human, technological, material) and capacity (production, distribution, knowledge, experience) that we will need to give effect to any extension or expansion of business and thereby assessing whether we have those resources and capacity, or in any case, if we are able to obtain them.
If you do not have the resources and capacity, before implementing the expansion plan, we get, for example:
* We may need to obtain external funding (always making sure that we will be able to repay the loan with the profits generated).
* We may need to hire or train new staff we already have (for that could previously need to develop our ability to hire, evaluate and train staff).
* We may need to delegate more responsibility and authority, for example, if we have to climb or promote workers.
* Ourselves might need more training on specific management issues that have not mastered very well.
* We may need more experience in some or all aspects of our business, for example, if we will open a new branch, knowing that the delegate tasks, workers cannot deceive us about the operation or the possible results.
* Might need to perform an internal analysis of the business, for example, to ensure that the business is functioning properly and have no weaknesses, before opening a new branch or business unit.
* We may need to install new information systems, security or control, for example, if we’re going to open new branches or business units, and no longer have direct control over operations, it is necessary to have systems allow us to control each unit, measure their performance, get regular reports, etc.
In this expansion plan must be said about what the next steps to implement growth strategies, as well as those responsible for this, the scheduling of tasks and timeframes required to implement the plan. This will give us a better organization and coordination, and be more efficient in implementing the strategies.
The key to good growth does not hurry, be cautious, carefully assess the problems, obstacles or difficulties that could arise, and, above all, make a good plan for growth. We should not assume, for example, if a business was successful, a branch thereof shall have the same success in another geographical area.
Finally, note that in business there is always a gap when passing, everything else becomes much easier, for example, the most significant expansion for most businesses is growing of the first unit to the second, and once taken that first step, it makes it easy to become a chain. Once this first challenge, the business can grow exponentially, and is no longer limits.