Contrary to what most people may believe, deciding to grow your business may not always be a good idea. Yes, the nature of most businesses is such that they constantly need to keep growing; else they may not be able to compete with other businesses in their industry.
However, if you do not grow your business in the right manner and also at the right time, you could end up facing so many problems that you would rue the day you decided on business growth. There is no doubt that there can be immense benefits of growing a business, but it is also true that business growth may bring with it various disadvantages.
Before you decide to take the leap and expand your business, you need to look at all the pros and cons of business growth, so that you can take a knowledgeable decision.
Benefits of business growth
The primary reason why people want to grow their business is to take advantage of the benefits associated with business growth. These benefits are:
- Being able to bid for larger and better projects: Growing your business allows you to take on much bigger projects than you may have been able to in the past. If you are in the business of selling some product, then increasing your production capacity allows you to fulfil larger orders and take on bigger clients. Similarly, if you are in the business of providing a service, then increasing your man power enables you to bid for jobs that you previously could not hope to bid for. In fact, if you want to work with large clients, you may have to think about business growth because such clients rarely ever work with small businesses.
- Increased profits: This is undoubtedly one of the main reasons why people want to grow their businesses. By expanding your business and attracting larger clients, you can enhance your profits considerably. Yes, your business expenses too will increase significantly, but if you have gone into the expansion in the correct manner, then you should be able to turn a larger profit in spite of the increase in business expenses.
- Increasing your market penetration: It is possible to achieve greater market penetration by growing your business. With business growth, you can put your products or services in front of a larger target market and can thus increase the market penetration for your products. Business growth may even make it possible for you to enter new markets that you did not have access to previously.
Considerations before growing your business
Business growth can open up newer markets for your business and turn out to be extremely lucrative. However, before you decide to grow your business to take advantage of the above benefits, you need to understand some of the negatives associated with your decision. These are:
- Significant increase in business expenses: Business growth will require you to spend a considerable amount of money for expanding your business. You may need a new manufacturing plant or a new office, which are sizeable expenses and may require you to invest more money into the business. Apart from these expenses, you may also be looking at other expenses in terms of hiring new employees, training them and advertising your business in newer markets. Hence, before you decide to grow your business, you need to be absolutely certain that you can raise the money required for these additional expenses. If you go into the business expansion blindly and without considering what your return on investment will be, you could be making the worst mistake of your professional life.
- Difficulty in finding good employees: Another major problem that is associated with business growth is the difficulty in finding good people to help you with your business expansion. Once your business expands, it is unlikely that you will be able to manage the added workload on your own. Hence, if you do not have the right people to handle key tasks, you will not be able to expand your business in the right manner. Thus, before you decide to grow your business, you need to ensure that there is enough of a talent pool out there for you to pick your key people from.
- Business growth not in line with your long term goals: Many business owners take the decision to grow their business simply because they think it is time to grow, or because their competitors are expanding their businesses too. However, your decision to grow your business has to be in line with the long term objectives that you had set when you had started your business and should not be based on any other factor, such as trying to compete with others.
Before deciding to grow your business, you need to analyse these pros and cons and make a decision accordingly. Consider your long term goals from the expansion, know how much money you want to make in terms of profits and also be realistic about whether or not you can see the business expansion through. Only after you have considered all these factors should you think about growing your business.