As a business coach, you’re probably wondering why I would be talking about not expanding. For a start, whilst 90% of my clients are looking for business growth or expansion, I do work with some who actually do NOT want to expand or grow. For them, working with me is about working better, more efficiently and more effectively. For some business owners, the thought of expansion is a wonderful thing, but with it comes some considerations. Timing is everything too. Some of the following items might be an issue for you now, but once you rectify that item, you might be ready and able to successfully expand. In business, situations are always changing.
Reasons to not expand your business
1. You don’t have the resources
To expand a business there are often resources involved. It might be another office location or perhaps decking out another truck with all the tools and gear to put another crew on. You may need more computers, phones, laptops or iPads. If you use a program or app, you may have to pay for more users. With extra operational staff, you’re going to need more man-hours behind the scenes to handle extra billings, payroll, enquiry handling and general administration. All these items come with a price tag and commitment. Renting premises usually means a longer-term lease. If you’re buying, leasing or borrowing for plant, equipment, vehicles then this means either investing your capital or looking at finance.
2. You don’t want debt
With all the above expenses, you may well need to borrow money or commit to leases. Remember also that you’ll need working capital – your purchases will have to still be paid. Also, staff (or contractors) expect to be paid on time … so even if you do have the capital to buy resources, you may actually need to keep this money in reserve to pay the day to day bills.
3. You don’t have things running smoothly already
Sometimes I have business coaching clients who are keen to expand straight away, however, the core business is not yet right. If you can’t get the base business working like a well-oiled machine, then do NOT expand. If things are glitching now, you will only duplicate and magnify those problems.
4. You understand that sometimes expansion actually will mean less profit
I’ve been around the block a few times and I know that increased turnover (sales) does not automatically equate to proportionally increased profit. Every business is different and in some cases, the expansion allows the overhead costs to be absorbed far more so that profit is increased. I worked closely with a builder years ago and we job coded every project. Statistically, I could prove that when he had multiple projects on the go, the profit would be less. He was spread too thin, wasn’t able to jump on problems quickly and when he was getting quotes, was in a hurry, and didn’t get multiple quotes per trade. There is frequently that point during growth where it’s not cost-efficient to have a manager or supervisor, but when you get to that point, then the growth becomes effective.
5. You don’t want the stress
With increased workload usually comes increased stress. The growth phase can often have teething problems and challenges occur. As the business owner, that usually falls back on you to sort it out and those solutions are not always quick, easy and fast. Maybe you just don’t want that stress.
6. You want more time for family, self, lifestyle
Often when you ask business owners why they go into business, some of the responses are freedom, flexibility, lifestyle or personal time. To have a strong, vibrant and successful business, usually (especially in the early months) you will be time-starved, overworked and underpaid. As you iron out the wrinkles, find your feet and become established things can settle down somewhat – unless you go on an expansion mission.
7. You’re not sure you will do it well or right
We all know there is fear of failure, but there is also fear of success. Yes, some people fear success and so fear growth. When I delve deeper, I often discover the reason. It may be that they realise their back end isn’t working well, or they don’t have the right team on board to make it happen. Maybe they even lack a little self-confidence that they can do this – and do it well.
8. You don’t want greater risk
With growth comes risk. It might be exposure to new clients who you fear may not pay you. It may be risk associated with new staff who may not deliver well. It can be any number of things that by having expansion you increase your risk exposure. Often small businesses fly under the radar at many levels. Perhaps they have been lucky to not have a client go bankrupt or a staff member sue them. I say ‘luck’ because possibly they are not structured properly, don’t have all the right legal contracts and are not covering their bases with the relevant insurances.
9. You don’t want (more) staff
To expand, you often need human resources. People! There are a huge number of options out there now, from the traditional employee, through to casuals, contractors, offshoring or even the use of artificial intelligence (AI). Recruiting great team takes skills and effort, keeping them is even more important. With team, you have the ability to leverage their time, but they can also come with their own set of challenges. The right team you will love and will help you make excellent profit. The wrong team will have you dreading the day you even opened the doors.
10. You’re happy where things are now
Quite simply, things are good, you’re happy, you make fine money and you are enjoying your business. So you think, why rock the boat and change? Keep in mind too, not everyone is comfortable with change, and if you know you are one of those people, then perhaps growth (change) is not your strong suit.
11. The time or industry is not right
Timing is everything. Perhaps from your perspective, there are personal things going on in your life. Another child is due to be born, or you currently have some health issues. Would expansion at that time be prudent? For everyone, the things that can be an issue are different. I know myself, when my children were small, I pulled on the brakes as my focus was on being a parent, however, once they reached high school, I felt I could focus more on my business.
Also, the industry is very relevant. I have seen people buy video stores and book stores as the decline was occurring. Yes, they got them very cheap (because the industry was changing) but invariably, after much effort, pain and cash bleed, ended up closing and folding. It’s so important to know the industry you are in (or going into) and to ensure that industry is on the rise, not on the fall. Are innovations coming in which will change how things are done, which may well impact on the level of service you can provide? Technology, outsourcing, globalisation are all changing the face of business. New industries are emerging and some of the traditional ones are dying or rapidly changing.
My belief is that anyone in business should be well informed of what they are doing. If you’re considering growth, I’d be happy to talk to you – if nothing else than to determine if it’s the right move for you. If you’d like to connect with me, give me a call on 0411 622 666 or email firstname.lastname@example.org My passion is your potential.