In recent years, the United States has faced many challenges in its industrial sector, including trade disputes, geopolitical unrest and natural disasters.
COVID-19 caused factory closures, major delays in supply chains, product shortages and shifting consumer demand. Factors such as the Great Resignation, growing skills shortages and going consumer demands mean that there may be as many as a 2.1million manufacturing jobs unfilled by 2030.
In these circumstances, it’s a good idea to approach business expansion cautiously. You might decide expansion is the right decision.
These are seven things to consider before you start expanding your facility.
1. Are you outgrowing your current space?
If you have outgrown your space or are receiving more business than you can handle, it is a clear sign that you need to expand.
There are a few options available to you in these situations. It might be worth looking for a bigger space in your area where you can move your business operations. This would allow you to hire more staff and increase production. You might also consider opening a new location to reach a whole new customer base.
2. What will you do with all that extra space?
A facility expansion is an option if your business grows rapidly and your current space is no longer sufficient. However, developing a business can be difficult.
It is important to clearly outline how the additional space will be used and what revenue it will bring in. Are you planning to add new product lines? Or will you continue manufacturing the same inventory? Are you planning to expand your customer base into new countries? Are you willing to transfer your existing operating procedures to the new facility? Who will manage the establishment of this facility and the recruitment and training of your staff?
It’s not enough just to jump in and hope for the best. Comprehensive business planning is key to successful business growth.
3. What are your long-term goals?
Do not rush to expand your business without considering the long-term goals of your business. Yes, it is possible to open a small facility in another town that will generate additional revenue in the coming months and years. It’s also relatively low-risk. Is it worth it for a small profit? How does it relate to your long-term goals?
Think strategically about your business expansion plans. For example, a strategic and thoughtful investment will yield far greater returns than a quick reaction to outgrowing your existing space.
4. Are You able to access the resources you need?
Are you able to afford the expansion of your business, including purchasing equipment, space and workers?
You’ll need to assess your current cash flow and the projected cash flow when expanding. What happens if your business experiences unexpected delays, staff turnover increases, or customer demand decreases?
The current climate is too uncertain to rely on past years’ sales figures or projections. It’s crucial to prepare for the worst and have enough money to cover you in an emergency.
5. What are you looking to expand?
It’s possible to be keen to enter a particular market
in a specific region. But how do you know the area? To find the right space, determine which suppliers to use, evaluate competitors and identify patterns in customer spending, you will need to do extensive market research.
You might be more comfortable keeping your local business open if this is your first expansion.
6. Are You Open to Other Solutions?
A co-working or hybrid space can be a great way to start your journey to business growth. This will allow you to hire more staff and try new things without signing a long-term lease to get additional space.
7. Is it the right time?
It is difficult to determine the right time to expand your business due to the constant disruptions in the industrial sector. It is important to evaluate the pros and cons of each option, assess your financial situation, create a solid business plan, and analyze the market. It may be worth taking the plunge if your business is in a growing sector. This is especially true if you have been making consistent money and have the resources to do so.
