Say your business is humming along at a sustained month-over-month growth rate of about 20%, which puts it well within the respectable sweet spot of 15-45%. As long as you’ve maintained a consistently low burn rate, you could be primed to expand.
But is growth the right strategy for your company? When you started out, you probably just wanted to meet a certain level of predictable profitability. Now that you’re there, though, you might wonder if scaling makes sense.
To be sure, leaders decide to grow their organizations for a variety of reasons. Some discover an untapped market—or an untapped market discovers them. Others see a surge in demand, as happened to Zoom at the beginning of the 2020 pandemic. Zoom’s importance as a communications portal shot up so fast that their hiring rate nearly doubled over a few weeks.
If you’re sure it’s time to consider getting bigger, but you’re not sure which steps to take, ask yourself the following questions. Each question will help you figure out your upcoming moves toward a broader brand footprint.
1. Does it make sense to bring in growth partners?
Plenty of companies leverage the expertise of outside consultants when they want to expand. However, you don’t necessarily have to outsource this job. Look internally first: You might discover that someone already on your team has the background, skill set, and interest to become a growth champion.
World-renowned entrepreneur Neil Patel used this strategy to grow his presence in more countries. Patel earlier had hired Brazilian-based Caio Beleza to head up a South American arm of one of his NPAccel business ventures. When Patel decided to scale, he tapped Beleza after reviewing the employee’s impressive background and consistent results. This allowed Patel’s corporate interests to flourish without the need to onboard anyone from the outside.
2. Do we need a different infrastructure?
Every company has its set workflows. Yet the workflows that make sense for your team right now might seem clunky if you get larger. You might need to rearrange your hierarchy or rethink everyone’s current positions in a major operational redesign.
For example, let’s say you’re planning to expand by taking on more government contract jobs. You’ll need someone to find, write, submit, manage, and close out all the bids and proposals. Depending upon how successful your company becomes, you might need to create an entirely new department or shift human and financial resources.
3. Have we updated our business plan?
It’s time to review that business plan—again. Before you make any major moves toward scaling you’ll need to reexamine the plan that’s been working so far. Often, business plans become outdated, particularly if you wind up doubling or tripling your operations suddenly.
Consider this situation: You have the opportunity to merge with a competitor. Adopting a competitor could give you a bigger stake in the industry. Think back to the Disney and Pixar merger, for example. The merge was a terrific chance for Disney to rapidly obtain more customers and get a foothold in a desired territory, which Disney CEO Robert Iger mentioned as being key for driving Disney’s growth.
When applying this to your own business, you have to be ready to make the changes necessary to have a successful merge. You may need to update certain aspects, like your business plan. In fact, some aspects of it probably won’t make sense after the merger. Give it a good once-over to ensure it’s airtight.
4. What are the logistical ramifications of an expansion?
“Let’s go global!” It’s one of those “thinking big” statements that sounds motivating and exciting on face value. When you get into the nitty-gritty, though, you run into a lot of potential roadblocks. Even if you’re completely online, as in an e-commerce store, selling to people anywhere on the planet requires significant consideration.
What should you keep in mind? International shipping rates vary, as do taxes associated with bringing products in and out of certain countries. Legal regulations can also become a snag if you make a misstep. Plus, you’ll need to consider your content if you’re pitching to people who don’t speak your language. Just translating your messaging doesn’t usually cut it. Rather, you’ll need to find someone to translate the underlying meaning of your words as well.
5. How will we finance our growth?
Expansions inevitably require some kind of additional cost. Maybe you need to lease equipment, upgrade your software, onboard new talent, or even set up shop somewhere else. Even if you have cash on hand to pay for these necessities, you might want to think twice before spending it all.
Many companies take on debt when they start to grow. It’s a common solution and allows for fast money. Work with your preferred lender to explore the wide range of loans available. Remember that some can only be used for narrow purposes, such as covering worker salaries or revitalizing your tech toolbox. Depending on the structure of your business and where you’re located, you may also be eligible for other loans or grants. Ideally, you’ll want to avoid dipping into your personal savings, unless you’re comfortable taking this risk with your household finances.
Not every entrepreneurial startup that winds up becoming a revenue-producing business ends up expanding. Nonetheless, if you feel the moment’s right for growth, you don’t want to miss the boat. Just be sure to answer the big questions before taking the plunge.