VentureHow.com’s 7 Essential Factors to Consider before Growing a Small Business tries to answer an existential question for many small business owners. Should you remain small or grow big. What are the criteria that should drive the million dollar question?

Your small business is steady as it goes and provides a decent income. Now, there is an opportunity to take the next step. It could be the decision of growing from one restaurant to the next. Or adding a new product line to your online store. Or expanding the scope of your market globally. Irrespective of the size of the opportunity, whether to leap or not remains a paramount factor.

Are you ready to expand – from personal, financial, and business reasons?  Is it necessary or even profitable for your small business to become bigger? Small business owners know that it can be difficult enough to stay in the black, especially with brick-and-mortar business locations that incur additional expenses that typically increase as time passes. Take the time to sort out your situation and consider your initial objectives when starting or buying a small business. It is your investment at stake when you take on the additional responsibility of growing your small business.

7 Essential Factors to Consider before Growing a Small Business

These elements are all critical to the long-term success of your business and your personal sanity as a business owner. A review of all of the factors should take place before signing onto any additional projects, lines of products or contracting to take on the other location. Some primary considerations begin with the:

• Original business plan;
• Current stability of the business;
• Major life events;
• Resources: financial, hiring and training;
• Scalable processes;
• Competitive landscape; and
• Exit plan.

As a small business owner, you should have a business plan. Some may have chosen to fly by the seat of their pants with their operation, but those looking for additional investment or a bank loan would have had to create a business plan to justify the need for the business and possible profit for investors. Many small business owners soon forget their business plan and let it gather dust in their archives as they struggle to stay on top of the daily operations of the organization. This is a mistake. Your business plan should be reviewed at least once a year and at times when you are contemplating a game-changing decision. In the review, take the original objectives of the plan and expectations and see if your opportunity is in line with what you initially desired. If a growth opportunity works with the original vision and objectives of the plan, it may serve as one reason to justify growth to yourself, business partners and family. Annual reviews of business plans help keep business on track and provide opportunities for revisions and amendments as changes occur.

Honestly, what is the state of the current business? It is easy for an outsider to come in and feel the work culture in an environment and any friction within an organization. Perform your litmus test. You want to examine the health of the current business and address issues with employee performance, organization, and processes, as well as the financial and staff resources available before any expansion. Family-owned or operated business can quickly fall prey to internal conflicts, but so can businesses owned by first-time business owners. Business owners may not yet have developed the ability to separate business from personal, to fire unproductive or gossiping family members, to properly onboard their staff and look for and retain the best qualified employees that they can reasonably afford. When small businesses are plagued with internal issues or have escalating debt to work out, this is not the time to take on more responsibilities but to address the current problems. Business owners with a stable balance sheet and continued profitability over an extended period as well as a well-trained and dependable staff are in a good place for growth.

Small business owners have only so much energy and internal resources to depend on. Periods of illness in spouses or close family members, a new child, personal fatigue, and age should all be part of any internal equation used when thinking of expanding a small business. This may mean that business owners look for additional supports and resources to help them at home or in their business but with any decision, personal reflection is necessary to decide whether the opportunity is right for them and their loved ones at this stage in their lives.

New opportunities require financial resources and workforce. Review your tax returns while your business has been in operation or for the last 3-5 years and speak with your accountant to discuss the capital necessary and possible profits and losses which are a result of the expansion. What is the ROI that can be reasonably expected? Crunch your numbers to see whether you can afford to assume additional risk and how fast you can come up with the money to invest. Owning and growing a business involves more risk and tying up capital. Look to see if the rewards outweigh the risks taken on with any expansion. Of course, have a trusted advisor review incoming legal documentation, proposals, rental agreements, partnerships or other contracts that will be binding for all parties involved prior to signing anything. Also, are you making the most use of the staff that you have and can you keep the current team as is or must you hire and train new staff to support the change? Money, time and training must be accounted for before you make a final decision to grow the business.

Some businesses begin rapidly with no written processes in place. Business owners may create procedures and plans as the company continues in operation but keep it in their head. The failure to write down the desired processes within the business causes multiple issues for an organization. Established methods that are in written and spoken form helps the entire organization understand what is expected of them at all times, with or without the involvement of the business owner. Also, written processes help to reduce the possibility of litigation, identify areas for improvement and assist owners when they decide to step away from the management of the business, pass it on to another to operate or finally decide to sell. All are excellent reasons to invest in working out all necessary processes to make it easier to scale an organization and keep individuals and stakeholders accountable.

Review the state of the market and the economy related to your organization and industry. Will the economy support the additional expansion or is your target market saturated with similar businesses and are they struggling to stay afloat? Smart business owners and serial entrepreneurs and investors understand the health of a target industry and when it is a right business decision to grow or turn down an opportunity. Talk to current customers to see if investment into new products or services would be of benefit to them. Growth that expands the value proposition for customers is a worthwhile investment.

Why did you begin your business? At this stage of the same, where did you want to be in your business? If you were thinking of stepping away from the company, spending more time with the family and handing over the reins to someone else in the organization, this option may be taken off the table or significantly delayed with an expansion. More responsibility with development means that business owners have to spend more time at work and handling all the issues that can occur during this phase of operations. Review where you are and what you want. Did you want to own and operate the business indefinitely or did you have a bright idea of when you tried to sell or hand over the management? This is important to take into account for both yourself and loved ones that were holding out for that expected endgame.

Carefully consider whether or not expanding a business is in your best interest. There are many ways to make your current business more profitable and successful before investment of additional capital or staff. Step back and do a careful review of your organization and your needs before blindly grasping at a golden opportunity.