DOWN TO BUSINESS
A look at small business questions from the Southwestern Oregon Community College Small Business Development Center (SBDC).
By Arlene M. Soto CMA, CGBP, Southwestern SBDC Director
How do I decide what’s next for my small business?
Entrepreneurs are visionaries. Starting a business creates something out of an idea, a dream or an unmet need. It is exciting. Entrepreneurs have boundless energy dedicated to creating something where nothing existed before. When a business succeeds beyond the start up phase, it is time to consider “what’s next?”
For some entrepreneurs, the next step is to sell the business and move on to start another enterprise. For a few, the next step never happens, they just stay at a level they can handle alone and continue working in their business until they burn-out, retire or decide to try something else. For others, the next step is expansion.
Statistics show expansion can be fatal for a business if the growth is not properly planned. Entrepreneurs are idea people. Expansion ideas get their creative juices flowing. Sometimes they do not have well developed management skills. This is not bad, it just may not fit the needs of an expanded company. Expansion requires taking a hard look at business issues: goals, resources, personnel, the management team, working capital, capacity and customer needs. Asking the following questions may help in determining if the proposed expansion makes sound business sense:
- Does this expansion fit the long term and short term goals of the company?
- Who supports the expansion idea? Who needs to support the idea?
- Will the expansion meet the needs of existing customers?
- If new customers are targeted, has the market research been done to document the want, concern, problem or unmet need?
- Is there excess capacity available in the company that the expansion will utilize?
- What pricing strategy will be used to ensure new products or services are profitable?
- What is the cost to the company of this expansion?
- Where will the money come from to pay for the expansion?
- Will employees need to be hired or retrained?
- Is the current management structure capable of handling the responsibilities in the expanded company?
Entrepreneurs generate many new business ideas. Planning for expansion takes time. Ideas can divert the focus of the management team from the existing product or service to that exciting new potential venture. Without leadership focus, the business may not create the success hoped for. One strategy to deal with new, exciting ideas is to write them down and save them for at least two weeks without looking at them. After at least two weeks, ask if the idea still looks like a great prospect. If it does, begin the planning process using the questions above. Many ideas may be good, just not a good fit for the company at this time or in this place. If the idea is a good fit, it may be time to consider expansion in that direction. Is your business poised to ask “what’s next”? Ongoing business strategic planning is the key to making sound business expansion decisions.
The SBDC is a partnership of the U.S. Small Business Administration, the Oregon Small Business Development Center Network, the Oregon Business Development Department and Southwestern Oregon Community College. Arlene M. Soto has been the Director of the Southwestern Small Business Development Center since July 2007. To ask a question call 541-756-6445, e-mail email@example.com, or write 2455 Maple Leaf, North Bend, OR 97459. Additional help is available at the OSBDCN Web page www.bizcenter.org.