FAQS on Growing Your Business
Get answers to questions on taking your business to the next level.
How do I know when it’s time to grow?
Although it may be challenging for a risk-taking entrepreneur to be patient, don’t become one of those failure statistics because you tried to grow too soon or too fast. Wait for signs that you have the money and the customers to justify expansion. Have you been profitable for at least three years, with a steady and positive cash flow? Is your industry on the upswing, and are enough customers coming your way? Are your customers loyal, or asking you to open a second location closer to where they live? If the signs are there, and you have the operational systems along with a robust team of employees in place, it may be time to go for it.
What’s the best way to expand?
There’s not a best way; it depends on you and your business. Your business can grow by attracting new customers, selling more to the ones you have, introducing new products or services, adding space to your current location, opening a second location, expanding your online presence, licensing your product, franchising your concept, or expanding into a new market such as government contracting or selling overseas. Consider all the possibilities and determine what’s best for you.
I’m thinking I want to grow by attracting new customers, but is that easier said than done?
It can be easier – and more cost-effective – to get your existing customers to buy more, or to buy more frequently. They already know and trust you, and have a need for your product or service. Offer incentives and rewards. Set up a frequent buyer program. Give them the inside scoop by telling them when items will be going on sale. If you also want to attract new customers, start by asking your existing customers for referrals.
I’m interested in opening a second location, but how do I know it will do well if I can’t be there full-time to run it?
Can your current business run without you being there? Will your existing customers make purchases when you aren’t there? If you would lose sales if you weren’t available to meet and greet your customers, then a second location isn’t the answer. But if you have a capable staff and things go smoothly even when you’re not available, by all means, look at a second location. But also be sure to factor in other success factors at your current location, such as traffic patterns, feeder shops in the area, the demographic of area customers, employee pool, competition, and the like. Before you decide on a second location, let the UH SBDC help you do your research.
How would I franchise my concept?
Not to discourage you from that particular growth path, but be aware that franchising your concept involves considerable time, cost and legal paperwork. First decide if your concept is a good one in terms of salability. Will your product or service appeal to a lot of consumers in other locations? Will other prospective franchise owners also see it that way? If you really think so, then think about how the change from a small business owner into a franchisor will change your life. You’ll be selling and supporting franchises instead of running your business. If that appeals to you, then look into the financial implications and legal requirements and begin to think about how you would set things up.