You have started your business and now you think you are ready to grow. How do you really know if you and your company are ready for the next step? This course will help you determine if a growth opportunity is right for you.
Duration of the course: 00:30:00
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1.3 Course Topics
This course will teach you some ways to successfully grow your business. Some of the topics covered in this course are:
• How to evaluate if your business is ready to expand
• Growth and expansion strategies
• How to create a growth plan
Many additional resources are identified to help you. Visit the resource icon in the course player or locate additional tools, templates, and mentors on SBA.gov once you finish the course.
Let’s get started!
1.4 Growing Smart
If you’re thinking about expanding your business, that’s probably a good sign that your business is successful, and you are looking to make more money or take on additional challenges. Like starting a business, expanding isn’t as simple as just turning the key and opening the doors. Successful expansion results from good forethought and planning. Knowing when to expand is the first step in growing your business. Let’s start by taking a look at some of the ways to evaluate your business needs and determine if you are ready to expand your business.
1.5 S.W.O.T Analysis
One way to evaluate the potential for growth in your company is with a S.W.O.T. analysis. S.W.O.T. stands for Strengths, Weaknesses, Opportunities, and Threats. S.W.O.T. looks at internal factors-factors within your business-and external factors-factors outside your business-to help you make an informed decision. Select each letter in S.W.O.T. to learn some of the
questions you should ask when evaluating each aspect of a S.W.O.T. analysis.
When evaluating your business’ strengths, ask yourself the following questions: Considering all your resources (human, mechanical, financial, etc.), where does your business excel? What are your assets? What are your core competencies? Where is your business most profitable? Do your revenue streams and profits indicate that you are ready to expand?
When evaluating your business’ weaknesses, ask yourself the following questions: Similarly considering your resources, where does your business need to improve? What needs are you not meeting effectively? Will those weaknesses slow down your growth, or will they become amplified during the expansion process? Where are you losing money? Where do you lack resources?
When evaluating your business’ opportunities, ask yourself the following questions: Where are the best areas to expand your business? Are there areas that your competition are not covering that you could? Do your customers have new needs that are not being met? Are there economic, political, or social factors that could improve your marketability? Are there technological advances that you can start using to improve efficiency?
When evaluating your business’ threats, ask yourself the following questions: Are your competitors expanding in a way that could affect your market share? Are there economic, political, or social factors that could negatively affect your marketability?
1.6 The Cost of Expansion
Expansion of your business will mean additional expenses. Similar to when you started your business, there will be initial costs, whether for equipment, building space, or personnel.
Make sure you understand and accurately predict the costs of expansion. You want as few surprises as possible during this process. This is especially important if you need to find outside financing for your expansion.
1.7 Business Changes
Expansion will result in changes to all aspects of your organization, including your assets, personnel, operations, and even your leadership of the company. It is important to keep this in mind as you anticipate the needs of your business in its growth stage. Select each item to learn more about how growing your business will affect these different areas.
More than likely, growing your company will require you to increase your assets as well. This could mean acquiring new machinery or equipment, or new leases on property.
Whether you are expanding to a new location or adding products and services, you will most likely need to increase the number of employees you have. Do you have current employees who have shown they can handle increased responsibility and take over some of the things you currently manage? Will you need to hire experienced professionals for things you may currently handle such as accounting or information technology? If you are expanding your product or service line, you will need to train your employees on the new products or services. Where will you focus your personal efforts and where will you need your employees to step up and help?
Consider how the expansion will affect your operations. Some of the changes will be obvious, like the inclusion of new equipment or new processes. However, you should also think about how your existing processes will change. Will the expansion affect the demand for your existing
products or services, and if so, how will that affect the way you deliver them? Will you need new permits or licenses? How will your employees spend their time, and how will expansion affect
the way they perform their daily tasks?
How will your impact on the business transition? Will you still be providing most of the services, or will you be more of a big-picture visionary? How will the expansion affect the amount of time you have to complete business-related tasks? Which of your current tasks will you delegate to your employees? How will you empower your employees to lead others?
1.8 How Does Expansion Support Your Vision
As with any significant business decision that you make, you should ensure that your proposed expansion is in line with your vision or mission. While expansion into other markets and diversifying your product can be a great way-even a critical way-to expand, don’t lose sight of the direction you intend for your company. If you determine that your expansion is outside your current mission or vision statement, then you may consider revising these statements. However, doing so should not be taken lightly. Choosing the wrong method of expansion can confuse the consumer or your employees as to the message of the company, and ultimately compromise not only your growth strategy, but your core competencies as well.
1.9 Is Expansion Optional or Necessary?
Sometimes expansion is a way to grow a business you have loved, and a way to create new and interesting challenges for yourself as a business owner. However, other times expansion could be critical to the future success of your business. For example, if you are no longer able to meet production demands because you are too busy or overwhelmed, or you are turning away
potential customers, you may need to expand your personnel or facilities to accommodate the increased demand. Likewise, if your competition is expanding and taking away business from you, you may need to grow in order to maintain your market share.
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