Starting a new business, then reaching a stable point where you can consistently operate and take on new work, is an incredible achievement. But that’s far from the end of the story.
Businesses grow at different rates, but it’s rare to find a company that doesn’t expand or diversify in some fashion over time. Growth means more opportunities to bid on jobs, a larger portfolio of services and the potential for increases in revenue and profits. Whether you’re driven to make your mark within your industry or simply want to give your company the best chance of success in the big picture, growth is a vital consideration.
Let’s review different scenarios where you should consider expansion and how you can implement an effective growth plan.
Small businesses can only take on so much work without missing deadlines, overworking employees and equipment and turning out substandard results. If you’ve established your enterprise and performed especially well with the work you’ve done thus far, you may find more and more offers or inquiries coming your way. If your industry runs primarily or partially on a project bid model, you might see opportunities you know your business can capably handle without having the capacity to act on them.
If you’re regularly rejecting work that offers a good fit for your company simply because it would stretch your resources too thin, you may be in a good position for expansion. While there are costs associated with an expansion that are especially important to consider in this context, like hiring more staff and acquiring more equipment, knowing your company can reliably take on more work should help you do the math to determine whether the financial benefits outweigh the increased responsibilities.
Diversifying operations allows your company to take on a broader array of opportunities. This can help keep your company stable: If one line of work offers fewer projects, you can focus on more active ones. The Houston Chronicle explained that connected but distinct offerings can help offset losses in a specific area of operations. In construction, for example, working on light industrial as well as commercial projects would allow your organization to shift its attention between the two areas depending on the amount of available work.
This approach to diversification can help keep associated costs low with the proper approach to allocating resources. A construction company can use many of the same assets and employees across both industrial and commercial projects in many instances. While it requires careful planning to maximize returns and deep knowledge of the business climate in the area where you operate, offering a range of related services can mean a broader overall base for your business.
Competition makes it more difficult to secure the work that drives your company forward. If you have a competitor that takes on many of the same projects as your company, you’ve likely engaged in competitive bidding processes and have been both chosen and passed over for that work. If your competitor departs the market for whatever reason - from moving to a different area to focusing on a different type of work - you may be in an advantageous position. You know the demand for work exists within the area where your company operates and that you can likely complete much of it.
Understanding why a competitor may be leaving a market is important, of course. If they’re leaving or reducing their presence because of indications that work in the field may soon dry up, then expansion obviously isn’t a good choice. However, if the departure isn’t related to viability, your company may have an opportunity to expand into a market with steady demand and a decreased supply of labor. While you’ll likely need to increase the available number of employees and assets like heavy equipment, you’ll already have most of the competencies and organizational tools in place.
No matter why your company chooses to grow, it will need more equipment to take on additional jobs in a capable fashion and finish them in consistent, competent fashion. Heavy equipment costs are high, especially when acquired directly. Cat Financial offers a variety of leasing and financing options for new and used equipment, helping your business manage this significant cost more effectively during periods of growth. To learn more about how we can help your enterprise, get in touch with us today.