When is the right time to expand your business?
If your business has been growing constantly, there will come a time when you have to start thinking about expansion. Expansion is a risky venture, because it requires capital investment and brings about a lot of changes.
According to data from Industry Canada (as of the end of 2012), there were 1,107,540 employer businesses in Canada, of which 1,087,803 were small. Small businesses account for 98.2 percent of employer businesses, medium-sized businesses resulted in 1.6 percent of employer businesses and large businesses were a mere 0.1 percent of employer businesses.
Whether you are small, midsize or large, it is essential that you make the proper considerations before you expand your small business.
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Will you benefit from economies of scale?
Usually, when a business expands, it will be able to reduce its per-unit cost of production. You should only expand your business if the resulting economies of scale enable you to lower your prices and increase your overall profit. Expansion can be beneficial to your business in many ways.
It allows you to protect yourself against your competitors’ price cuts and gain new resources such as better marketing resources, improved facilities and additional product features.
Are your competitors expanding?
Doing research about the market can put you in a better position to decide whether or not to expand your business.
If you can gather information about your competitors, you may be able to learn new ways to provide more benefit for your customers. Your competitors’ decision to expand may result from the discovery of new opportunities in the market, and you can either follow their lead or take a wait-and-see approach.
Taking a wait-and-see approach enables you to determine if there is really sufficient demand for your products and weigh the benefits against the risks. If you decide to expand your business, you should try to improve on your competitors’ ideas instead of copying them.
Can you finance the expansion?
If you choose to expand your business, you need to acquire additional facilities, equipment or inventory. It is important that you know exactly how much capital you need to invest and how you are going to get financing.
Also, you have to make sure that the expansion will enable you to make enough profit to repay your loans and sustain your business. Many businesses find themselves having serious debt problems because they fail to plan their growth carefully.
Are you prepared to hand over important responsibilities to others?
As your business grows, you have to run it in a different way, and you will most likely become more dependent on your partners or employees. For instance, if you plan to open a new store, you need to let someone else manage it because you cannot be in two places at the same time.
Handing important responsibilities to someone else means that you will have less control in the management of your business. You need to be prepared to take a less hands-on role if you want to expand your business.
Will your customers accept the changes?
Expanding your business means implementing a lot of changes. Your customers may need some time to accept the new way you run your business.
For example, you may have previously established a close relationship with your customers by communicating with them on a more personal level, and you may not be able to maintain such a relationship if you decide to expand your business.
Every successful business needs to expand at some point or other. When it comes to the essentials of small business management or overseeing a midsize or larger company, knowing when to take that next growth step forward is key.
Face it, knowing the right time to expand can significantly reduce the risk involved and help you build a stronger foundation for long-term growth.
About the author
John McMalcolm is a freelance writer who writes on a wide range of subjects including marketing, technology, and social media.
Marketing matters: from IBM to Kyndryl
Prior to joining Kyndryl as Chief Marketing Officer, Maria had a 25-year career at IBM, most recently as the tech giant’s CMO where she oversaw all marketing professionals and activities across North America, Canada and Latin America. She has held senior global marketing positions in a variety of disciplines and business units across IBM, most notably strategic initiatives in Smarter Cities and Watson Customer Engagement, as well as leading teams in services, business analytics, and mobile and industry solutions. She is known for her work with teams to leverage data, analytics and cloud technologies to build deeper engagements with customers and partners.
With a passion for marketing, business and people, and a recognized expert in data-driven marketing and brand engagement, Maria talks to Business Chief about her new role, her leadership style and what success means to her.
You've recently moved from IBM to Kyndryl, joining as CMO. Tell us about this exciting new role?
I’m Chief Marketing Officer for Kyndryl, the independent company that will be created following the separation from IBM of its Managed Infrastructure Services business, expected to occur by the end of 2021. My role is to plan, develop, and execute Kyndryl's marketing and advertising initiatives. This includes building a company culture and brand identity on which we base our marketing and advertising strategy.
We have an amazing opportunity ahead at Kyndryl to create a company brand that will stand apart in the market by leading with our people first. Once we are an independent company, each Kyndryl employee will advance the vital systems that power human progress. Our people are devoted, restless, empathetic, and anticipatory – key qualities needed as we build on existing customer relationships and cultivate new ones. Our people are at the heart of this business and I am deeply hopeful and excited for our future.
What experiences have helped prepare you for this new opportunity?
I’ve had a very rich and diverse career history at IBM that has lasted 25+ years. I started out in sales but landed explored opportunities at IBM in different roles, business units, geographies, and functions. Marketing and business are my passions and I landed on Marketing because it allowed me to utilize both my left and right brain, bringing together art and science. In college, I was no tonly a business major, but an art major. I love marketing because I can leverage my extensive knowledge of business, while also being able to think openly and creatively.
The opportunities I was given during my time at IBM and my natural curiosity have led me to the path I’m on now and there’s no better next career step than a once-in-a-lifetime-opportunity to help launch a company. The core of my role at Kyndryl is to create a culture centered on our people and growing up in my career at IBM has allowed me to see first-hand how to prioritize people and ensure they are at the heart of progress in everything Kyndryl will do.
How would you describe your leadership style?
I believe that people aren't your greatest assets, they are your only assets. My platform and background for leadership has always been grounded in authenticity to who I am and centered on diversity and inclusion. I immigrated to the US from Chile when I was 10 years old and so I know the power and beauty that comes from leaning into what makes you different from other people, and that's what I want every person in my marketing organization to feel – the value in bringing their most authentic self to work every day. The way our employees feel when they show up for themselves authentically is how they will also show up for our customers, and strong relationships drive growth.
I think this is especially true in light of a world forever changed by the pandemic. Living through such an unprecedented time has reinforced that we are all humans. We can't lead or care for one another without empathy and I think leaders everywhere have been reminded of this.
What’s the best leadership advice you’ve received?
When I was growing up as an immigrant in North Carolina, I often wanted to be just like everyone else. But my mother always told me: Be unique, be memorable – you have an authentic view and experience of the world that no one else will ever have, so don't try to be anyone else but you.
What does success look like to you?
I think the concept of success is multi-faceted. From a career perspective, being in a job where you're respected and appreciated, and where you can see how your contributions are providing value by motivating your teams to be better – that's success! From a personal perspective, there is no greater accomplishment than investing in the next generation. I love mentoring younger professionals – they are the future. I want my legacy as a leader to include providing value in work culture, but also in leaving a personal impact on the lives of professionals who will carry the workforce forward. Finding a position in life with a job and company that offers me a chance at all of that is what success looks like to me.
What advice would you give to your younger self just starting out in the industry?
I've always been a naturally curious person and it's easy for me to over-commit to projects that pique my interest. I've learned over years of practice how to manage that, so to my younger self I’d say… prioritize the things that are most important, and then become amazing at those things.