Should You Expand Your Business?
You’ve grown your business to a point where you have a steady stream of clients and projects. Now you’re thinking what your next move should be. You have several options. You can add capacity by hiring staff, outsourcing, or partnering with another designer. You can diversify by offering new services or developing a line of products. Or, you can expand your business by setting up shop in a new market, moving into another design specialty, or merging with or acquiring another firm. Which to choose depends on your long-term goals and tolerance for risk.
Adding capacity offers the most flexibility with the least amount of risk. It allows you to do more of what you are already doing well, and if business slows down, you can adjust by cutting back or downsizing. If you’re looking for a new challenge, then diversifying may be the way to go, provided you have the marketing and sales skills to promote your new services or products. Diversifying also involves more of a financial commitment and will take time away from your current business to grow the new one. You may need to add capacity before taking steps to diversify.
Expanding a business involves the greatest amount of risk and commitment of finances and time. However, it can be highly rewarding both professionally and financially. Before deciding to expand, you’ll need to do some market research to determine if there is sufficient demand to support the expansion and, if so, create a marketing plan and budget. You may also need to develop a personal and business financial plan and secure financing to cover the cost of the expansion and keep the business afloat until it becomes profitable. If your expansion involves entering into a new area of design, you will want to consider whether to build the firm from scratch or capitalize on an existing firm by executing a partnership, merger or acquisition.
Also, consider whether you want to get further from design work since expansion means hiring and managing more people which entails additional time and often greater stress.
Growth is a natural part of any business’ evolution. Consider carefully, though, how you want to grow. Do you want to be spending your time managing two businesses or would you rather be designing? If the latter, then expansion probably is not a good option for you, unless you partner or merge with someone who will run the business while you direct the design. Challenge yourself, explore new areas, but keep in mind that your strengths are the foundation of your success, and your first venture needs to be on sound financial footing.