While expansion activity has been sluggish, things are picking up. Expansion opportunities could help position your company for continued growth, and may enhance your business’s selling power when you decide to exit the business. 

While growth is exciting, remember  that not all types of expansion will work for every business or for every industry. Listed below are initial questions you may want to consider.

Make the Business Case

Growth can be expensive, time-consuming and loaded with potential problems if not done correctly.

>Does the expansion fit into your short- and long-term goals, and what do you hope to achieve?

>Examine your strengths, weaknesses,
opportunities and threats (SWOT). Will the growth provide economies of scale?

>Will growth impact your production capacity or ability to deliver services? If you decide to buy a new company, will it be easy to integrate?

For internal growth, how will you allocate resources and what will you have to do to make your current business bigger and better? If you want to acquire a new business, can you take on that process yourself? Are you and your management team fully committed to expansion?

Support Systems

How many times have you heard you should “surround your business with good people”? Accountants, attorneys and bankers can make recommendations that fit within your goals, objectives, risk tolerance and financial circumstances.

>Do you have accurate financial reporting to manage the business? Is your legal house in order? Do you have a strong banking relationship that meets the financial needs of your business? Your advisers can provide unique insights into your market, introduce you to potential key partners and help you manage the process.

>Could another person make your business more efficient and free up more of your time to focus on the expansion? Could you select someone who could be your successor?

Financial Considerations

>Do you have the financing in place? When you expand a business, don’t forget about your cash flow.

>Have you accounted for expensive renovations, stock, payroll and equipment, as well as unexpected costs?

>Do you have collateral to fund the expansion? Are you willing to take on the risk if the expansion fails?

>Do you have enough experience in the industry to get the financing you need?

Personal Demands

>Are you ready to devote more time to
the business, if needed? Does your family understand your need to commit more time to the business?

>Is the return on investment worth your time and effort?

>Do you have the skills needed to manage growth? If not, can you develop the skills or do you have someone who can provide the needed skill sets? Will you still enjoy your job after you have grown?

Taking the above questions into consideration can help facilitate your decision-making process and serve as a starting point when meeting with your advisers.