How To Scale Your Industrial Business
Often, as a business owner, you will reach a stage where you are getting so much work that you might be struggling to cope in your current setup. So you are faced with the dilemma of either scaling up or turning down the extra work. This is often a very difficult choice to make as it’s in the entrepreneurs nature to want to take advantage of such opportunities but do you want to risk everything you’ve taken so long to build up?
What Form Will The Expansion Take
This is potentially the most simple and possibly the most complicated question all at the same time as it’s so important to get it right. Are you just taking on extra work in the same manner as your current orders? If so are you needing to get extra business premises. Or are you looking to branch into another revenue stream and need to set up almost from scratch.
Evaluate The Potential Return Against The Cost
The cost of this expansion will be the key and related to the points above, are there premises costs for a new location or equipment costs for a new type of venture? How many new customers will this attract and what profit margin will each sale bring in? This info, if evaluated correctly will enable you to work out how long it should take to repay the investment needed to expand and if it’ worth it or not?
Are You Able To Use Your Current Providers & Suppliers
Can you still use your current suppliers? An important point not to just assume it will all be fine as they may not have the capacity to do this if it is a large expansion and your cost analysis is based on their rates and then you have to switch supplier this could be really bad. So if you need to have a certain amount of Fuel Oil, for example, be sure you use a large supplier that is geared up for this.
Do You Need Extra Management & Staff
Staffing is another key point. How many do you need and how many staff from your current, already profitable, business will need to be transferred to this new division to make it run smoothly? This will weaken your current operations as you will be spreading your expertise in two and then having new and less experienced staff in some positions in both parts of the business. It’s important to take stock of how staff feel about this move, as staff motivation is important. Also how is the new area going to be managed? How hands on will you need to be and it is important to take on board the pressure this will put on your own personal life.
What Are The Risks If It Fails
Finally, what is the risk of failure? Is your business strong enough to survive if the new venture doesn’t work out. It’s prudent to assess this as a realistic possibility alongside how much it will gain you if it all goes to plan. It’s not worth losing everything of course.
