Think your business is ready to grow? For many new business owners, expansion is top-of-mind at pretty much all times — and with good reason.
Indeed, Forbes found up to 70% of otherwise successful startups actually fail due to premature scaling.
That said, it’s crucial that you take a strategic approach to business growth, and avoid falling into the trap of scaling before you’re ready.
Here, we’ll take a look at some of the key telltale signs that your business may be ready to grow.
1. You’ve Achieved Your Current Goals
You’ve set SMART goals (that’s specific, measurable, attainable, relevant and time-bound) for your business, right?
(If you haven’t, start there — and maybe don’t stay too focused on growth just yet.)
Once you’ve achieved your current short-term goals, the only logical thing to do is to take the next step toward your big-picture ones.
But it isn’t so much that you’ve accomplished these goals.
Rather, the idea is to understand how accomplishing them has put you in a prime position to grow your business. Moreover, it’s about how you should build your business moving forward, using your past accomplishments to guide your future efforts.
If you were recently able to successfully bring aboard 10,000 new customers, your focus for growth might be to expand to a new physical location populated by those who fit your persona profiles.
Or, if you’ve reached a short-term goal related to your average order value, growth might mean adding complementary products to your catalog to sell more and provide more value to your current audience.
Really, the possibilities are endless — and will always be unique to your situation. And that’s a good thing. In keeping your current and past goals in mind at all times, you’ll always have a clear idea of the next steps to take on your way to true success.
2. Audience Interest and Engagement Is High
If you’ve managed to keep your current audience engaged with your brand for an extended period of time, it’s a pretty good sign that you’ll be able to successfully expand in some way.
It may mean expanding to a new, yet similar, audience, knowing that they’ll likely become just as engaged as your current customers are. Or, it may mean delivering more value to your current audience base, knowing that they have an affinity for most everything you put out there.
As discussed above, you want to take a SMART approach to understanding audience affinity — identifying specific signs that growth should be in your next step.
Some key metrics and factors to consider here include:
- Retention rate, average order value, and lifetime value
- Customer Satisfaction Score (CSAT), Net Promoter Score (NPS), and Customer Effort Score (CES)
- Qualitative feedback, such as brand mentions, survey responses, and product reviews
Overall, the goal is to know that what you’re doing is working in terms of keeping your customers engaged and coming back for more. In turn, you’ll have a good idea of what else you could do to better serve them — and can focus on growing your business in a way that allows you to do so.
3. Your Customers Want More (or Your Industry is Evolving)
Ironically, a decline in audience engagement and customer satisfaction may be a sign that your business needs to grow.
Even a plateau in engagement and satisfaction can mean growth should be around the corner for your business.
If your customers are “satisfied enough,” but aren’t exactly ecstatic, you absolutely should be doing more to keep them on board and engaged. Failure to keep up with their evolving expectations will cause them to experience diminishing returns from your brand — and will eventually cause them to defect to a competing company.
Sometimes, your customers will tell you point-blank what you could be doing better. Whether it’s developing new products or services, improving your customer support efforts, or simply catering to a new geographic location, your qualitative customer data can make crystal clear where growth is needed within your organization.
Other times, the answer may not be all that obvious. For example, if your CSAT and NPS plummet — along with your retention rates — you’ll have to figure out what happened before you can grow your business in an impactful way.
(Really, you should always consider both quantitative and qualitative data when conducting market research.)
It also may abe that your customers’ expectations aren’t yet changing, but your industry is facing a massive shift across the board. Emerging trends and technological advances can render your current efforts worthless. This means you’ll have to grow in some way to keep up with your competitors.
In any case, delivering the same value you delivered to your customers yesterday isn’t necessarily going to work tomorrow.
If it’s clear that your customers’ expectations are evolving, it’s crucial that your business evolves to meet these new needs as soon as possible.
4. Your Resources are Maxed Out
As your customers’ expectations evolve, and as you reach your business goals, it will take more and more resources just for your team to maintain the status quo.
This will eventually lead your team to a point where you no longer have the capacity to keep things moving in the right direction. A lack of equipment, space, and/or expertise and manpower can easily cause your business to stagnate — and to quickly fall apart at the seams.
Although you do want to get your company up and running on all cylinders, this doesn’t mean operating at maximum capacity for too long. To operate with minimal room for error is to essentially invite disaster to strike.
If you’ve taken a strategic approach to setting SMART goals for your business, you’ll likely know with certainty where your operations are maxed out. And you’ll likely know how to grow your business to overcome said bottleneck.
(Note that this is assuming you’ve reached your goals as planned. If you haven’t reached your short-term goals, but you’re still maxing out your resources, you likely have more pressing issues to work through before thinking of business growth.)
Basically, if things are going so well that you literally can’t keep up, your business is probably ready to grow.
5. You’re Operating on Autopilot
A lack of resource usage can be a sign that your business is ready to grow.
Yes, getting operations running like a finely-tuned machine is a good thing — but only to an extent.
If things are running too smoothly, complacency can easily rear its ugly head. This, in turn, can cause your team to miss out on innumerable opportunities — and can even be enough to sink your business, altogether.
This, again, goes back to the importance of setting SMART short-term goals for your business.
Typically, reaching your goals will come as a relief when compared to facing the challenges that preceded the accomplishment. And it will certainly be tempting to rest on your laurels and put things on autopilot for a time.
In the interest of building your business, you need to resist this urge to coast. Instead, reinvest your unused resources in ways that will positively impact your operations.
If you’ve reached the point where you can finally catch your breath, take a beat and do so. Once you’ve regained your bearings, you should immediately set your sights on the next big thing for your business.
6. You’re in a Great Financial Situation (and the Outlook Is Even Better)
If you’ve managed to keep your customers engaged and satisfied while maximizing your operational output, chances are pretty good that you’re generating a ton of revenue.
As with your other resources, you don’t want to let your growing capital go to waste.
Of course, the decision to grow isn’t just based on a single number in your bank account. Rather, it depends on your company’s overall financial situation.
In addition to seeing consistently increasing revenues, you should also:
- Be free of any of the major cash-flow issues that typically plague small businesses
- Have an excellent credit score and consistent credit history
- Have minimal outstanding loans
Having all your financial ducks in a row before setting out on the path to business growth is crucial. If your financial situation needs improvement in any way, you should probably focus your efforts there before thinking about scaling.
Zooming out even further, you also should consider your industry’s projected outlook — and that of the overall economy, as well. Essentially, you want to know that no major changes are on the horizon that could throw a wrench in your plan for strategic growth.
If everything seems on the up and up, growth of some kind should be in the future for your business. By ensuring your business is in a great financial situation, you’ll be free to make moves that bring your company to the next level.
Think Your Business Is Ready to Grow? Think Funding
Even if business is booming and you’re in an excellent financial situation, you’ll likely still need some additional capital to help facilitate growth.
Which is where business expansion loans come in.
With a business expansion loan, you can secure additional cash on hand to invest into specific areas of your operations. As your company reaches ever-higher levels of success, you’ll easily be able to repay the loan with interest. You should still have a ton of cash left to reinvest into your business once more.
Once you’re ready to apply for a business expansion loan:
- Be sure you have a good understanding of the loan requirements
- Analyze your financing needs
- Be clear about what aspects of your business you’ll be changing with your renovation and expansion
After you’ve created an outline of your project, develop a ballpark budget so you have an idea of how much money you’ll need to borrow.