Going Big With Your Small Business

Your little business is growing up! You’ve weathered the tough years well and now the time is right to expand. Your reasons for doing this could be to increase profits, carve out some time to enjoy your life, or even simply because you can. Take care though, as the path to turn your small business into a big business contains many pitfalls that could seriously injure, or even kill all of your hard work.

First, examine your motivations for the expansion. Has it become difficult to keep up with orders? Do you find that your employees -- or yourself! – are constantly swamped? Have you spotted areas where it would be easy to increase production to raise profits? If the answer to any of these questions is “Yes!” then growth is a sensible choice. Some not so good reasons are:
• The space next door has become available for purchase
• You have had a financial windfall and it’s burning a hole in your spreadsheet
• You like the idea of owning more equipment with your name on it, or more employees calling you “Boss.”
These not so good reasons could accompany a sensible growth plan, but are bad motivators in of themselves.

You are going ahead with the expansion, what should you do first? Mapping out the changes you envision is the best place to start. Are you simply adding machines to your manufacturing line? Are you moving into a bigger building with more employees? Perhaps you are opening a branch or franchise in a completely separate location. Once you know how your business will look at the end of this growth period, you can specify exactly what needs to be done, built, purchased, hired, etc. to make it all happen. Now inspect this list and fill in the financial blanks. How much will the new machinery cost? If you hire more people, what kind of a hit will payroll take, or how much more money will supplies be for these new employees? When you have the financials in detail, take a really good, hard look at it. If you really cannot sustain what you want to do, this is the perfect opportunity to walk away unscathed.

You’ve made your lists and checked them twice, it’s now time to move on to the next step. How you do business day to day will be one of the most important aspects of this process. Look at your procedures. Can they be simplified or duplicated? With some investment in technology, could they become faster or obsolete? What about consolidation? One object of this exercise is to get your operations set up so that they can be done by new employees or easily added to existing employee’s workloads. Another reason is to make sure operations can be accomplished at a new location or department. If your business cannot run well with the new setup, perhaps your processes need some serious revamping, or again, expansion may not be the answer. This is another opportunity to abandon growth before it’s too late.

Let’s go into detail with second locations, or franchising. How does the work get done? Is it one employee? Is it one machine? Is it just you? Maybe it’s a few employees with your guiding hand? Only two of the preceding four scenarios would survive a franchise. Your procedures and processes MUST be able to be duplicated – as in a second machine – or run by themselves without you to oversee – as in with a manager. Look at the Blue Man Group. In the beginning, they were a small business (performance group) that was becoming too popular for the three of them to keep up. Realizing this, they locked themselves in a hotel room for a weekend and hammered out all that it meant to be a Blue Man. Once they had their list, they hired people that fit their needs and franchised. Now they have multiple, independent groups that provide the same product, but without any of the original Blue Men needing to be there. Your franchise should be like that.

The Blue Man Group leads us to the next important point: People. With expansion comes more work, more activity, more balls to juggle. If you have done your homework well, you will have identified each aspect of work to be accomplished and hired accordingly. The most vital hire that you do, however, will be your general manager. This is the person who will oversee the day to day operations for you, or run the other location. This person will be there when you won’t be, will handle problems and tell you about the solutions afterwards, will make your growth successful. This person needs to be competent, respected, NOT micro-managed, and paid extremely well. Your general manager is the keystone for your business’s survival.

All of these points are necessary for making your small business turn into a big business, but there is a major, possibly THE major pitfall of any expansion: the owner yourself. To put things into perspective, you started with nothing and after years of hard work, sleepless nights, and so much spent money your small business is thriving and ready to take off. You know everything about your business, what it needs, the best way to do things – you’ve even said the phrase, “If you want something done right…” many times. How can anyone possibly do anything better than you? To grow your business however, you cannot do it yourself anymore. You will have to let someone else do it, all by themselves. Let’s make the point clear:

The number one company killer, lurking over your expanding small business is: You not letting go.

Is this what you envision, that you let go and the company is running smoothly, you are not needed to solve problems, you go home early… it’s almost like they don’t need you? If anything like that happens to you after you expand, don’t be despondent, REJOICE! You made it! You are in a shockingly small percentage of owners that took their small business big. You have planned well, organized well, hired the right people, trained them well, purchased all they need, and got out of the way. Not only have you done a fantastic job growing your business, you have also grown as an owner alongside your company.