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Want to Grow Your Business? Answer These 3 Questions First
For many successful small business owners, there comes a time in their company’s life when they arrive at a fork in the road. The divide represents an opportunity to grow their business. The opportunities can include opening a new location, hiring new employees, launching a new product or service or possibly buying a competitor. If they choose the path on the right, they want to grow their business; if they choose the path on the left, they have decided to forgo making an additional investment in their company and want to remain at or near their current size. How do business owners decide which path to take? Are they hurting their chances for success if they decide to stay small?
What did the House of Flowers do when they came to the Growth Fork-in-the-Road?
Sometimes the best offense is a good defense. If the only direction you know for your company is forward, then you’ll run into more walls than you need to, causing damage to your company as well as lost time and productivity. Sometimes the best move is to NOT hire a new employee, to not open a new location or to not launch a new product or service. Here are three questions you need to answer in order to determine which path is the right one for your business.
Are you a small business owner or an entrepreneur?
If you can’t answer this question honestly, you need to stop what you are doing right now and figure it out. A small business owner is someone who places a priority on work/life balance. They want to be in control of their own destiny and see their business as a lifestyle decision. Most of the purchases for their companies are seen as expenses rather than investments. They aren’t interested in opening new locations, hiring new employees or launching new products or services. An entrepreneur is the exact opposite. Growing their business is a top priority; purchases are investments rather than expenses.
What does the future – short-term and long-term – hold for your industry?
Our economy has witnessed radical transformations in the past 15 years. Entire industries have been disrupted (movies, books, music, taxis and hotels, to name a few). It is absolutely imperative that you understand the direction of your industry before making an investment into growing your business. You don’t want to upgrade your room on the Titanic. Use social media like LinkedIn and Twitter to ask other business owners about the state of your marketplace. What economic indicators do they use to predict future trends?
What is your contingency plan if your path is a dead end?
What happens if, after answering the first two questions, you decide to open a new location, hire new employees and/or launch a new product or service…and the market abruptly changes? You need to play the “what if” game and have your answers before you hit a wall. For example, if you lease space to open a new location, have an opt-out clause written into the agreement so you aren’t bound to it for five or ten years. The clause may result in paying a higher rent, but it may also save your business if you don’t have to pay for space you won’t be using. If you need to grow your sales force or operations department, think about outsourcing the work as an option. If the work disappears, you don’t have to make the difficult decision to lay off people you recently hired.
When your business comes to its next fork in the road, do your homework before choosing a path. The right decision can save you time, money, resources – and possibly your company.
This post was written in partnership with Progressive Insurance. I have been compensated, but the thoughts and ideas are my own. For additional small business tips, check out Progressive’s Small business Big Dreams program.