Every business owner knows that their company will start to grow at some point. Better yet, it should start to grow eventually, which means you’re doing something right.
However, just because your business can grow, it doesn’t necessarily mean that it should. Most people believe that growth opportunities are beneficial for a small company. Although that may be true to a point, a growth opportunity can also be a double-edged sword for your company.
In other words, your business should grow at one point or another, but perhaps it shouldn’t grow right now. It all comes down to whether or not your company is ready to grow and if the conditions are favorable to ensure that growth is profitable and beneficial, and not the other way around. Simply put, you have to know when the right time to grow your business is.
Otherwise, it may turn out to be a disaster. With that in mind, here are a few ways to spot the right opportunity to grow your small business.
Your Company is Profitable
Good profitability is one of the main goals of every business owner. If you earn more than you spend, it means your company is doing quite well. That’s why many business owners are focused towards ensuring a positive cash flow for their small business.
In other words, a positive cash flow means that you have more money flowing in from accounts receivable than going out through accounts payable.
In such cases, you have excess cash and you might consider growing your business further. The fact of the matter is that market conditions currently suit your company’s profitability, but that may easily change very soon.
Every business owner knows just how unpredictable the market can be and how things can change from good to bad quickly. That’s why the time when your company is the most profitable is the right time to take the opportunity to grow.
Growth can simply mean opening up another business location to expand your business or perhaps even buying a franchise model as an alternative income flow.
Increased Market Demand
Your products or services on the market are doing well. As a matter of fact, they’re doing so well that consumers want more. However, you’re currently at your production’s limit and cannot meet increased consumer demand.
This is the right time to grow by increasing production, but you may lack the resources to do so. In such cases, many small business owners reduce product or service quality, in order to meet the required quantity.
This, however, is a mistake because consumers will easily notice the difference. You will cause an outrage and you’ll be left with excess goods no one wants to buy. Instead of risking bankruptcy, consider obtaining funds elsewhere to ensure increased production without sacrificing quality.
As an example, you may go to a bank for a loan or consider more reliable personal loans. The increased demand will help you pay off your loan and you’ll be able to not just meet that demand, but also grow your business accordingly.
You’ve Done Your Homework
Business growth is not something that should be taken lightly. As mentioned before, just because a growth opportunity presents itself, it doesn’t mean your business is ready for it. If you rush business growth, you may end up ruining it for good. That’s why knowing the right time to grow relies on forecasting and planning the growth itself.
For instance, many businesses consider expanding to a global market as a way to grow and avoid fierce competition in their local market. This is especially true for retail and e-commerce businesses that can cover a broader consumer base.
However, wanting to expand to a global market and actually managing it are two different things.
Still, if you plan for it and conduct regular forecasts, you will eventually get there. Simply put, you can only expand when your business is ready for it. Here’s a good example. It’s estimated that every business that expands to a global trade has to wait approximately 10 years to achieve a +1% return on assets (ROA).
If your forecasts predict your business can endure that long, chances are that its ready to expand. If you do your homework right and you’re absolutely sure your business can grow seamlessly, then it’s quite likely that it’s the right time to grow your business.
Your Industry is Growing
Another moment that may prove to be the right time to grow is growing alongside the industry you operate in. Growing while the industry stagnates or even fades is not a good idea, because you’ll eventually lose money.
However, if the industry is starting to grow, it may be a good opportunity to do the same with your small business. The main reason is that once the industry starts to grow, there’ll be more demand, as well as more competition to worry about.
If you start growing your business in time, you might eventually capitalize on being among the first to meet increased demand or being among the first to adopt the newest market trends and meet customer expectations.
Today, it may seem like only the industries involved with modern technology will actually grow. However, even other industries have the potential for fast growth.
That’s why you should be on a lookout for any rising trends on the market, so that you may spot both the right opportunity and the right time to grow your small business.
Growing your small business is a challenging task, to say the least. If not done properly, it can ruin your entire company and send you back years. That’s why it’s not only important to research growth opportunities, but also to know when the right time to capitalize on them is. Otherwise, you may be risking more than you’ve bargained for.
Author Bio: Keith Coppersmith