7 Questions To Ask Yourself Before Expanding Your Small Business According To FNB
Expanding a small business can be an exciting and potentially lucrative endeavor, but it’s not without its challenges and risks. Before taking the leap, it’s crucial to thoroughly assess whether your business is ready for growth. In the article “7 Questions To Ask Yourself Before Expanding Your Small Business According To FNB,” we delve into essential considerations that every entrepreneur should reflect on. These questions, based on expert advice from FNB, cover key aspects such as financial stability, market demand, and operational capacity. By asking yourself these critical questions, you can make informed decisions and strategically plan for a successful expansion.
1. Can you handle the increased demand?
Expanding your business means you will have to meet the needs of a larger customer base. This requires expanded procurement of stock and services, which will place added demands on your cash reserves and potentially put your cash flow and standing with your suppliers at risk. “Failing to make payments can destroy relationships and create long-term procurement problems,” warns Mabasa. And she emphasises that the additional demands on your business won’t only be financial. “You have to ensure that you have the necessary physical infrastructure, such as stock rooms, floor space, and fleet, as well as a team of well-trained staff that is ready and able to support the growing business.”
2. Are your suppliers up to the task?
Reliable suppliers are essential to the success of any business, but even more so to a growing one. Not only must your suppliers be able to provide you with the increased levels of goods and services you need, but they should also do so cost-effectively and on terms that benefit your company. “Customers don’t care that a supplier let you down – they see it as a failure to deliver on your part,” emphasises Mabasa, “so it is vital to assess your current suppliers and, if necessary, seek out new partnerships that align with your growth objectives.”
3. Is your governance framework robust enough?
As your business grows, so does the need for comprehensive policies, procedures, and legal compliance. Review your current governance structures and ensure they can accommodate the increased complexity that comes with expansion. This may involve updating existing policies, creating new ones, and seeking expert advice to ensure you remain compliant with all relevant regulations.
4. Have you established a strong support network?
No successful business, or business owner, operates in isolation. Surround yourself with a network of trusted professionals, including financial, legal, and tax advisors, as well as banking partners who understand your aspirations and your business. “These relationships are an invaluable source of guidance and support as you navigate the complexities of growth,” says Mabasa.
5. Are you prepared to manage a growing team?
Expanding your business often means hiring more staff. To effectively manage a larger team, you’ll need a dedicated human capital management specialist, or even an HR department. In line with the governance requirements highlighted in point three, you also need to ensure that all HR policies and processes are clearly defined and that you have the resources in place to support your employees’ professional development and wellbeing.
6. Have you considered the potential impact on your brand?
Growth can increase reputational risk, as you have less control over how your business and staff interact with the market and customers. “It’s crucial to consider the potential impact on your brand and have a plan to mitigate any risks,” advises Mabasa. This may involve investing in brand management, customer service training, and implementing robust quality control measures.
7. Are you mentally and emotionally ready for the challenges?
Running a growing business can be incredibly demanding, both mentally and physically. It may require sacrificing personal interests and time with friends and family. Be honest with yourself about your readiness to take on these challenges and develop a clear plan to maintain a healthy work/life balance. This might include delegating responsibilities, setting boundaries, and prioritising self-care.
“Before pulling the trigger on expansion, take the time to honestly assess your business’s readiness,” Mabasa urges, “because, while expansion is an exciting prospect with the potential for significant long-term benefits, it also presents many risks; so, it should only be approached with realistic expectations, a level head and plenty of preparation.”
