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If there is one thing entrepreneurs have in common it’s creativity. If there’s another thing, it’s the tendency to be dreamers.
We all have such big dreams for our businesses, such plans, such high hopes.
We’re also some of the most driven people on the planet – if we weren’t, our businesses would never become a reality to begin with, let alone continue to grow and flourish.
So it’s hardly surprising that business expansion is a hot topic for entrepreneurs. No sooner have we conquered one mountain we’re turning our eyes to the horizon and asking, “What’s next?”
It’s natural, and exciting, and tends to lead to greatness, but sustainable business expansion that genuinely meets your goals doesn’t just happen spontaneously. It takes careful planning, partly to ensure you actually achieve what you set out to create, and partly to make sure you get there without forgetting crucial elements or accidentally building all the new at the expense of the old.
From a purely financial perspective, expansion tends to cost money. This isn’t necessarily a bad thing, and there’s a lot you can do you keep costs down, but whatever you spend should ideally be capital invested in creating future profit, rather than money that simply disappears.
More than that, expansion for expansion’s sake is seldom a good plan. You may be dreaming of a big business but what exactly does that mean for you? Why do you want to expand in this particular manner? What’s your endgame here? What are you trying to achieve?
Answering all these questions before you begin will make the whole process a lot smoother, here’s how to map out your big goals for business expansion:
Dream Your Biggest Dream
Mapping out your big goals is incredibly helpful, but it’s often difficult to know where to start.
Look at it this way, expanding a business is a lot like writing a story – you really need to plan the whole thing before you start, otherwise you won’t be able to visualise your path, the journey you’re taking, or see the end goal.
If you were writing a book you can get to the end of the first draft, then go back in and add all the stuff you didn’t realise you needed at the start, like supporting characters and exciting plot twists.
In business, you only get one draft.
You can correct your course in future chapters of your business story, but you can never go back in time. There’s no way to hire the extra staff you should have hired before you became totally overwhelmed, switch the focus of your marketing sooner so you don’t waste a fortune targeting the wrong people, or start laying the groundwork for a huge new product or service launch a few months earlier to build enough momentum.
So when you’re mapping out expansion plans, be sure to plan the whole story, not just the part you’re most excited about, or the thing you know has to come next.
Dream your biggest, most elaborate dream. Even if you think it will never be achievable.
Where you plan on being in five years may have absolutely no bearing on what you do for the next three, but it could completely change your game-plan.
If the dream changes, you can alter your future plans accordingly. Don’t get so stuck in the fear that you might dream the ‘wrong’ dream that you never start.
The beauty of mapping out of your huge, long-term, seemingly impossible goals is that, while you can’t go back and change what you did in your business, you can always change what you plan to do.
Start With The Next Chapter
While it’s super-important to get a clear view of the ‘big picture’ if you try to plan every stage of your journey in immaculate detail you’re going to get quickly overwhelmed.
Not only that, you will often find that it’s not possible to figure out the details of how later phases of your expansion will work until you’ve seen the outcome of earlier elements.
Add to this the possibility that you might decide to change direction later down the line, and spending massive amount of time going over every detail is overwhelming, impractical and potentially futile.
Instead, break your big huge goal down into manageable pieces.
Aim to achieve something tangible in terms of expansion and growth every year, then break that down into quarterly or even monthly goals.
This is not just easier to manage, it’s better for sustained growth, as it ensures every stage of expansion is strong and sustainable before you try to expand even further.
Start at the beginning – what’s the first chapter in expansion?
Once you’ve established that, figure out everything that needs to go into this chapter:
What Do You Need?
Take a look at the practical things you’re going to need in order to physically do what you’re planning. This might include sourcing suppliers and manufacturers, researching the most effective systems to achieve your goals, deciding on hardware, software etc.
Who Do You Need?
Once you’ve got the practicalities pinned down, consider if you will need more staff, or if the change will actually result in a need for less staff due to a change in focus, or increased efficiency.
How Much Money Do You Need?
Money is everywhere. Money can always be found through streamlining and innovation, and that begins with asking the big questions. The impossible questions.
– Mike Michalowicz, Profit First
There’s a really common myth in business: ‘You have to speculate to accumulate’.
If you want to make money in your business (and certainly if you want to make more money in your business) you need to spend money to achieve it.
To put that another way, if you want to build a new road you’re going to need a bulldozer.
Or are you?
Humans have been building roads for thousands of years; bulldozers have only existed since 1923.
All the things we ‘need’ in order to achieve growth might make it quicker and easier, but they’re not necessarily needed.
Expansion always costs you time but it doesn’t have to cost you money. There are ways to expand without incurring expenses.
That being said, much of the time there will be costs involved. It may be the need to hire more people, buy new equipment, or rent further space, or it may be the cost of marketing and advertising your new capabilities.
It’s important to keep your costs low, even if you have plenty of money in the bank to cover whatever you need.
Overspending is the fastest way to damage your profitability, and if your expansion doesn’t go to plan you may not recoup your outlay.
Getting stuck in the mindset that you need to have money in order to make money, and that you need to spend money in order to expand, grow, and reach your goals, is not only wrong, it can seriously stunt your growth.
If you had waited to start your business until you had a magic number in the bank, you might never have started at all. And if you want to start expanding and growing until you can pay for all those ‘necessary’ metaphorical bulldozers, you’re never going to reach your dream.
One of the central philosophies of the Profit First method is to keep your expenses as low as possible; to rethink things so you don’t need the bells, the whistles, or the bulldozers. And it really works!
So before you come up with a plan for expansion that requires shelling out a fortune, have a look at what you already have in your business, see how it can be tweaked, modified, or repurposed to fulfill the new needs you will have once you grow.
Ask the impossible question: how can you expand without increasing your expenses?
How Much Are You Trying To Achieve?
Just as you need to know how much expanding is going to cost, you should have a very clear idea of the amount of income you are trying to generate. Or more specifically, the amount of profit you are trying to generate.
You need to flip the regular equation for calculating profit so that profit comes before expenses:
This, in turn, will help you figure out how much you can afford to spend on expenses while still achieving your goals.
By calculating the amount of profit you want to earn, you can figure out how much money is left over to be spent on expenses.
If you’ve streamlined your expenses and still need more to cover essential costs, look at increasing your prices, not reducing your profits.
Before you go any further in your expansion plans get a really good idea of how much you expect to generate in sales, what percentage of that you want to earn in profits, and how much you can afford to spend on expenses, overheads, etc. Here are a few key areas you might want to consider:
Consider Expanding Digitally First
One great way to keep your expenses to a minimum is to expand digitally before committing to a bricks-and-mortar expansion that carries a lot of overheads and is difficult to scale back down again if things don’t go to plan.
Create New Workflows And Systems
Efficiency often depends on having a clear workflow in place for everything and sticking to it. It also hinges on ensuring you have system in place that is effective and delivers everything you need.
Deciding how you’re going to do anything new with help you establish these workflows, and allow you to make sure you have the budget to cover any related expenses.
Consider what elements of the expansion will require new skills or the use of new technology. Put a training plan in place to ensure everyone knows what they need to know.
Test Everything Thoroughly
Don’t assume your new systems and workflows are going to be effective – test them. It will take some time now but could save you a lot of wasted time and money later, and prevent clients becoming frustrated or things failing to work.
Plan Your Marketing Strategy
Any business expansion requires revising your marketing strategy.
You will need to plan marketing to support the new areas of your business, create any new branding elements required, hone you message, and decide exactly how you’re going to reach people with your new offerings (email, social, direct marketing, etc.).
You’ll also want to create plenty of new content to demonstrate the value of your newly expanded business and educate your tribe on the benefits of any or expanded new products or services.
Launch Like You Mean It
Even if you’re not launching a new product or service, any expansion of your business deserves a launch.
If that sounds like a daunting prospect, or you’re not sure how to ‘launch’ when you aren’t releasing a new product or service, consider the difference between a soft launch and a hard launch:
Soft launching generally involves creating new content to promote a change or development in your business, getting the word out via social media, email, and your networks, and can be done for any product or service not only when it’s first released, but whenever it undergoes a change or upgrade. If you’re expanding into a new niche or extending your existing niche a soft launch is perfect for raising awareness.
Hard launching includes everything in a soft launch plus all the bells and whistles you generally associate with the term ‘launch’, like advertising, big new social or content campaigns, webinars, new sales funnels, etc.
As a general rule of thumb, hard launch when launching is completely new, or a totally revamped version of something old. If you have a new website designed or undergo a rebrand it’s a great time to launch your revamped business and drum up a lot of attention and excitement.
Check Your Performance
Part of expanding your business is monitoring the performance of that expansion, ensuring customer satisfaction and the effectiveness of your newly expanded effort. And, as you would expect, I highly recommend keeping a watchful eye on cash-flow during big changes in your business. This is when your bookkeeper or accountant will become an integral part of your team.
This will not only give you a good idea of client impressions of your expanding business, it will also help you to maximise the lifetime value of your clients.
If you need help strategising the financial elements of expanding your business, and ensuring you achieve your goals and maximising the profitability, book a discovery call with me and I’ll help you get started.