By Pat Hayes, CPP
The road to success is strewn with failed attempts at trying to mimic the hot trend with no strategic plan, attempting to capture market share on price alone. This strategy, although successful in a growing economy, may spell ruination in down times.
A changing workforce, coupled with our current world economic crisis, will change businesses of the future. With a well-developed plan and an understanding of your products and markets, you may have untapped opportunities. Expansion might be a good fit.
Mayumi Mendoza-Bates, a staff writer for Power Homebiz Guides, talks about key questions for consideration:
Would an expansion bring on economies of scale? This could be in the form of new equipment efficiencies, plant restructuring or staff reallocation.
Are your competitors expanding? A change in direction in existing markets may be sending a signal. Having a clear understanding of these signals is a necessity before making a decision.
Can you finance an expansion internally? Current economic conditions are causing credit restraints by lenders. If you are already strung out, understand what strain an expansion may cause on your overall stability.
Will your customers tolerate your growing pains? Economic downturn does not bode well for consumer demand unless you are unique or in a leadership position. Be prepared to invest your time and resources for success.
Are you willing to play a less hands-on role in an expanded operation? Do you have personnel in place to take over part of your current responsibilities?
Are you diluting the passion that originally started the business? Divesting yourself of your original vision or passion may make you richer, but less happy.
Expansion demands a new business plan and new sales strategies with a need for sufficient financing. You will require more space, new equipment and a trained workforce.
Expansion can come in the form of acquisitions. Understand the synergies between your strong points and those of a potential selling firm. This may be an excellent opportunity to optimize overhead expenses though shared functions, thereby making the selling company more efficient, while lowering costs for the buyer. Be clear on your purpose and expectations. Only you know if the time is right for expansion. If it is, do it.
Visit www.sba.gov. Due to the American Recovery & Reinvestment Act, the Small Business Administration is offering new financial support programs and reductions in application fees. The web site is a wealth of free info.