Expansion Pitfalls All Small Businesses Must Avoid

A great number of small business owners have a constant urge to expand. Of course, the mere idea of expanding and becoming a “big” business known to thousands and millions of people is fascinating. However, expansion is not all about finding a new office space and hiring new employees to fill the vacant seats.

There is much more to expansion than most small business owners realize. It is unfortunate that a larger population of these business owners is only focused on the benefits of expanding while completely omitting the challenges that entail business expansion. Let’s take a look at some of the most common challenges, concerns and considerations before you expand your small business.

Outdated Information of Market Conditions

Too often, the decision to expand taken by most small business owners is based on information that is many months old. The important thing to consider here is continuous market research. An idea that seemed like it will lead the market a few months ago might be an average offering today.

For example, you might have landed in the market with a unique product, and its sudden popularity might make you think you should expand as soon as possible. What you don’t realize is that the acceptance and popularity rate of your product can diminish with time. The big reason behind that is the competitors who can imitate anything that you have created.

It does not matter if you have patented the technology, method or the product itself before launching it. Your competitors will always find some way to imitate and emulate your products. A great example of this is Apple, the tech giant that patented the touch screen technology. You can see there are more non-Apple touch screen smart phones in the world today than Apple’s own iPhone.

Regional Limitations

When you are expanding your business into new territories, you must know them well. You cannot expect people to react to your offerings, marketing methods, and advertising tactics in the same way everywhere. In fact, cultural considerations are an extremely important consideration when businesses are expanding.

You don’t have to be expanding to a completely new country to consider culture. There are many things that people in one state might love and people in another state completely hate.

These considerations have to be made based on the type of business you have. If your business has some cultural dependencies, you have to be very careful with where you are thinking of expanding your business operations.

Cash Flow Challenges

You need to be on top of your cash flow before you expand. Cash flow is important for any business, but it is essential when it comes time for expansion. It does not matter how much money you are expecting to come into the business after making the expansion move; it is going to require a lot of money upfront too. This is the time when you have to stop thinking about the revenue and start focusing on your income. Your revenue does not tell you how feasible it is for you to expand your business. It is the money that you can use without affecting your current operations that matter in the expansion.

Look at your profits and see how big they are. If your profits are small, don’t just assume that things will be fine and you should just make a move. You don’t want to create a situation where not only you fail with expansion but affect your existing operations as well.