Many factors go into determining the right time for a small business expansion.

The decision-making process is situational and “never that black and white,” said Stephanie Landis, who advises entrepreneurs as a consultant with the Kansas Small Business Development Center at Johnson County Community College.

“People typically come to us and say, ‘Our sales are increasing, so we need to grow,’” Landis said. “So that’s where we have to delve back and say, ‘OK, your sales are increasing—why? And how does that impact the rest of the organization next year and in the coming years?

“If they add additional people, will that also bring additional revenue? And if they update their IT, and that allows many more people to download their product or service, that can exponentially add growth. Can they support that?’”

The First Step in Your Small Business Expansion

Those are only a few of the exploratory questions that Landis poses to small business owners contemplating an expansion. But first things first: A business’s financials need to be healthy before a move can be justified.

“That’s typically where we’ll start, looking at their cost of goods and what dollars they have to cover fixed expenses,” Landis said. “It’s helping them to understand their financials and how their financials help them make decisions.”

Sometimes the financials don’t line up in favor of a move. How do small business owners react to that news?

“Some are like, ‘Thank you so much, I would have had to tap into my retirement or take out my home equity’ or ‘I might have lost my business if you wouldn’t have helped us see that,’” Landis said. “Some people might be disappointed, but they are typically grateful.”