Know Before You Grow

ThinkstockPhotos 615811528By Matt Stock

Fundamental to running a successful business is determining its path for growth and enrichment. Companies that rest on their laurels and remain stagnant for too long eventually erode and die. But, there’s no wisdom in growth just for the sake of growth. When are the best times to expand? Which risks are calculated versus careless? How soon should you expect to see a return on your investment?

Here are some things to consider and address before growing a business.

 

The Name Game

Something as simple as a business moniker can support or stunt growth. Hal’s Concrete is going to have a more difficult time expanding into asphalt than Hal’s Paving. If it’s not too late, I recommend choosing a name that defines your niche, but with room to grow.

Strengthen Your Core

For newer companies, it is essential to master the core business before branching out into new directions. Make sure your fundamental offerings are solid and reputable. If you are a plumber, don’t take on heating until you are the go-to source for plumbing.

For mature businesses, prioritizing comfort or growth is an important distinction. When a company has perfected its core product or service, reached a critical mass, and the market is tapped, then it’s time to envision future paths. 

Do the Research

Informal research is as valuable (if not more so) than formal. Check in regularly with sales teams and front line customer service staff to determine what services/products customers need and may be getting from another source.

No two businesses are exactly alike, but it’s wise to keep an eye on the competition. Evaluate what they’ve tried, what has succeeded or failed, and applications to your own company. Knowing your unique strengths and skills helps. But be careful. Don’t become obsessed with the competition. No one likes a copycat.

If you have the budget, conduct a more formal and comprehensive market research. Market research verifies that your current business is maximized. Research will also assist you to make strategic decisions about which products/services to add or new markets to tap. Hard numbers can verify what your informal research tells you. Think of it as a gut check that will save you money in the long run.

It’s important to remember that the new endeavor must align with the company’s mission and strategic plan.

Test the Waters

Depending upon a firm’s budget and risk tolerance, some will take the plunge, investing in new equipment, staff, marketing, etc. Others may opt to test the waters, starting slowly with a limited geographic area and perhaps leasing equipment or subcontracting out the first few jobs. Whether expanding slowly or all at once, it’s essential to gain traction early on. Amplifying marketing support – such as updating website service offerings, bolster SEO and pay-for-click advertising for these new offerings – is key to this growth.

Realistic ROI

So, the first focus can’t be profit, at least not at the beginning. Certainly ROI is important, but companies must be careful when chasing profits. By year two, ROI goals are fine. But truly, in year one, the focus should be on building a solid foundation.

Matt Stock is president of U.S. Waterproofing, a basement waterproofing and foundation repair company based in Rolling Meadows, Ill. He began working in the business, owned by his family, before he began high school. After graduating college and gaining outside experience, he rose up the company’s ranks to take the helm in 2014. 

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