Ever considered expanding your local business to another location? Once your local business is off the ground and running, the idea of expansion can become enticing. Having more sales, prestige, and visibility, for instance, can make even the most conservative business owner start to dream big.

There are also some solid reasons why local business owners may opt to keep their business at its current size: manageability, stability, and less stress, for instance, are also worthwhile goals.The decision of expansion all comes down to some straightforward questions about your organization’s current operations, as well as your own desires as an entrepreneur.


Is the business scalable?

Scalable ideas must meet specific criteria, and not all businesses can — or should — be taken to that next level. As Martin Zwilling wrote in Forbes, “Ninety percent of small businesses today are family businesses, which can be very successful, satisfying, and small by design. It’s a strategic decision.” Sometimes it’s better for the small family restaurant to remain just that, instead of angling to become the next major franchise.

Furthermore, the most efficient way to grow a scalable business effectively is to increase sales while keeping costs flat. This may be simple enough for someone with a software or manufacturing company, but what about those in the customer service industry? It’s still possible. “The key for a service-based business is to find the processes that can be automated, or to find a value-added way to generate supplemental revenue without adding labor hours,” said Will Housh, founder and CEO of HVAC.com, in Entrepreneur. Figuring out what can be automated with technology, and what parts of your service still need a human touch, will vary according to your business.


How will you cope with the increased risk?

Increased sales are great, but you may not want to deal with the increased responsibility that comes along with growth. “You might have more financial obligations, more stock to keep on hand and need higher sales numbers to help keep your budget on track and meet obligations,” said Yolander Prinzel in Investopedia. With more financial obligations on your plate, you will need a way to reliably keep track of your sales and budget. This might translate into more time out of your schedule, investment in financial software, or even the need to hire someone else to keep your organization’s financials in place.

The legal ramifications of growing a company are also worth considering. “Growing companies typically take much greater risk with employee-related compliance” including 401k deposit requirements and wage and hour laws, as Lee Colan said in Inc. Outsourcing these tasks is one way to make legal compliance a priority.


How would you handle additional work?

The real logistics of handling increased demand may be seem overwhelming. However, you may not need to hire full-time employees for every task. “Do you really need to hire someone? Many services can be outsourced or done by freelancers,” as noted in the Wall Street Journal. In addition, subcontractors may help fill these needs. “For some companies, hiring subcontractors can be a stop-gap measure to handle big projects or get through busy periods; for others, it’s a long-term strategy designed to create a scalable organization at minimal cost,” said Rosalind Resnick in Entrepreneur.

If your business really needs the help of full-time employees, then your responsibility increases. “Being a good employer doesn’t stop with fulfilling your various tax and reporting obligations. Maintaining a healthy and fair workplace, providing benefits and keeping employees informed about your company’s policies are key to your business’ success,” according to the U.S. Small Business Administration. By thinking outside the box, and even considering freelancers or subcontractors, you may help keep your expenses low while your company grows.


Is growth realistic?

While you may daydream about becoming the next magnate in your industry, it’s important to maintain a reality check with hard numbers when you’re setting goals for your organization’s expansion. “If you set a goal to earn $100,000 a month when you’ve never earned that much in a year, that goal is unrealistic. Begin with small steps, such as increasing your monthly income by 25 percent,” as suggested in Entrepreneur. Looking at the bottom line can help ensure your goals are within reach.

Furthermore, the emotional intelligence aspects of running a business should also be considered when you expand. “This business is your dream. It’s not your employees dream. They have their own dreams that don’t include you,” said Tom Egelhoff in Small Town Marketing. Realizing that your employees will have their own needs for motivation — and may not welcome an increased workload — is also a consideration.

Can your current technology keep up with increased production?

Would you need to update your technology — or innovate something entirely new — to meet your demand without overextending your resources? Embracing technology can make managing an expansion much more feasible. And it may give your organization a competitive advantage. “Nearly two-thirds of survey participants (64 percent) wish they took better advantage of technology innovations to help manage or market their business,” as a Bank of America survey noted. And there are almost endless ways for your company to utilize technology for growth. Even basic software for functions such as accounting, employee time tracking with Homebase, or email management can help keep your business running smoothly. When appropriate, automation is another way to keep costs manageable while increasing production. Even a simple productivity app on your phone can help keep you organized.


Overall, the decision to grow a local business and increase operations can be a pivotal move. Taking into account labor costs, business expenses, and your operational set up will make your decision easier.

What other questions about expansion can we answer for you? Let us know in the comments below.