When your business hits a certain point, it can feel like the logical next step is to expand. After all, why not take what you’ve built and make it bigger? For example, you might want to grow your local or global reach by launching a new product line or opening more locations.
Expanding comes with its own set of risks and rewards. So, before diving in head first, here are five things to consider when deciding whether to expand your business.
Analyze Your Current Situation and Set Goals
Before considering expansion scenarios, it’s important to assess your company’s current situation.
Figure out what worked, what didn’t work, and what could’ve gone better. This can help you solve issues that may come up in the future as you grow.
You should also take a look at future projections. Where does your business want to be in the next five or ten years? What do you want it to look like? What metrics does it want to achieve?
To assess your business’s current situation, try strategic evaluation techniques such as SWOT, SOAR, or VMOST.
Evaluate the Scenarios for Expansion
Every entrepreneur gets excited about the idea of expanding their business. Yet, it’s crucial to be realistic about the challenges involved.
Expanding means increasing your exposure, which can open you up to more competition. You also need to ensure that your customers are happy with the product or service you provide.
As you assess the expansion scenarios, you’ll want to decide between two basic types of expansion: vertical and horizontal.
Vertical expansion refers to growing your business through product or service offerings. In contrast, horizontal expansion refers to expanding your business geographically. Each of these expansion scenarios has its own advantages and disadvantages. Vertical expansion, for example, may allow you to specialize in a specific product, which could help your business stand out among competitors. The downside is that finding or hiring employees with the right skill sets could be difficult.
The horizontal expansion could allow you to reach more customers, but it might need a significant upfront investment. This article will help you differentiate between horizontal and vertical business expansion models. These questions will help you test the expansion scenarios and determine which path is best for your company.:
- Do you have enough budgeting to support expansion?
- Do you have the logistical capacity to support business expansion?
- Have you done local or international market research?
- Do you have enough human resources?
For some expansion budgeting tips, read this guide.
Take Cybersecurity Seriously
Cybersecurity is a hot topic for entrepreneurs because of its potential impact on their businesses. Yet, it’s not only about the financial loss. The risk of a data breach can impact your brand’s reputation, put customers at risk, and damage your sales. And if you’re thinking about expanding your business, make sure you’re doing everything to secure systems.
There are a lot of things that define your strong strategy for cybersecurity, such as:
- Encrypted cloud storage. Corporate data includes valuable intellectual property and sensitive consumer information. Information turnover can lead to fines, lawsuits, and brand reputation damage. Encryption can help protect corporate data from needless exposure. If you need excellent cloud storage, choose trusted providers such as NordLocker, which offers cloud storage encryption.
- Strong passwords. The consequences of having leaked passwords on a network or work device are way too common for firms. Once a hacker gets your password, they can access whole networks, endangering the organization’s information security.
Never use the same password for many accounts. Instead, try to create unique passwords each time and avoid using personal information as a password.
Bottom Line
In a nutshell, whether you decide not to expand or if you think that now is the right time to start growing depends on your business situation. By taking care of the factors we’ve discussed, you’ll have a better idea of where your company is headed and whether you should expand at the moment or not.