Take measured risks when expanding

Thinking about taking the next step and expanding your business? Shivani Gupta shares her tips on how to get it right.

The decision to expand your business is a challenging one. Sometimes you just have to do the sums, trust your gut and take some risks.

I have just expanded one of my businesses (my husband and I now own two day spas). Looking back, I thought I would share three lessons I learned from the process.

Lesson 1:  Do your homework. Opening a new spa meant borrowing more and a big investment in time and energy. We did the business plan, looked at revenue forecasts to help inform our decision. It is important not to get caught up in the excitement and ego of expansion and make sure you have the resources to do it properly.

Lesson 2: Taking measured risk. Talk to lots of people to help you make your decision. The bank manager, accountant, other business colleagues, trusted friends and family even provided valuable input. At the end of the day it was our business and our decision.  With good intentions, people often jump to telling you all the reasons why you will fail. Some people were telling us the time wasn’t right; there is an election, consumer confidence is patchy. There is always a reason not to do something. We reasoned interest rates are low, we knew the business well and we were confident demand was there, so we took the plunge.

Lesson 3: Don’t underestimate the value/economies of scale from expansion. For us, another store meant our investment in our branding is working better. There can be economies of scale in marketing and developing promotions, staff training, systems, and other business matters. The time spent on those items is working for us in two locations.

I am not advocating every business simply open up another shopfront or develop new products or services but it is worth spending some time reflecting on whether business expansion is right for you.

Shivani Gupta is an author, key note speaker, and personal and business coach. She is a successful businesswoman and the founder and CEO of Passionate People Institute. Shivani has won several awards including Telstra Young Businesswomen of the Year. She has a passion for inspiring and challenging women to lead the life they want to live.