The consequences of growing your business are worth considering in detail. Growth is a sign of success and ambition, but with it comes added responsibility, potentially greater liability and as yet unseen pressures. These apply to both your professional and personal life. Take some time to consider if growth really is the right move for you and your business.

This guide will help take you through the considerations that should precede an expansion plan. It will help you determine whether your business is right for growth and highlight some of the changes that growth will bring.

What are the risks?

To be an entrepreneur is to be a risk-taker. It takes someone with confidence in their ideas and the motivation to pursue those ideas despite the uncertainty of the future. The desire to pursue further growth is generally prompted by a desire for:

• Accumulation of wealth.
  
• Independence.
  
• Pursuit of personal satisfaction.
  
• Passion for a particular subject.

• The most tangible risk is the failure to make a profit and, ultimately, for the business to fold. If growth is too slow, market share is lost and stagnation sets in. Too rapid growth can outstrip available funds, leading to a cashflow crisis – the primary reason why businesses fail.
  
• Expansion means reliance on other people, with a possible loss of autonomy and control. Your own role may change – moving away from hands-on involvement to a more managerial role.
  
• Loss of independence can bring a sense of frustration and dissatisfaction. It is no longer just your show.
  
• Your original idea may be based on a consuming passion, but expansion may mean you have to compromise your purist view and produce an ‘inferior’ version for your customers.

• Work could begin to take priority at the expense of relationships.
  
• Your health can suffer.
  
• You may feel a loss of privacy and space for both you and your family.
  
• You may experience feelings of personal financial insecurity.
  
• You could lose sight of your original objectives and find you don’t enjoy your work any more.

Understanding your business environment – the external factors

Economic

Very few businesses, except huge corporations prepared to put a lot of time and resources into lobbying, can influence the economy and economic policy of a country to any great degree.

On the other hand, the economy and the policies that drive it influence businesses greatly. From the interest rate you pay on your loan to the mortgage rate you pay on your property, the minimum wage to income tax rates, pension tax relief to VAT rates, the influences are everywhere. Much of the effect is controlled by the Government, and much is controlled by the country’s overall prosperity, but none is controlled by you. Gaining a firm understanding of the factors involved, getting an idea of how they might change, and forming an insight into how to minimise their adverse effect (and maximise their benefit) is a wise investment of your time.

Political

Governments come and go and with each one come different nuances in economic policy. Each party has its own strategy and each has a different spin on how to improve the country’s prosperity. A change in Government usually means a change in economic policy.

Specific changes in legislation can have a direct impact. The introduction of the minimum wage, for example, had a significant impact on those businesses employing high numbers of low-paid workers.

Wider political policies may also be influential in your business sector. Consider the interests of the current Government. What promises do they need to deliver on? Who are they most keen to influence? What business sectors are they aiming to support and promote? And how might their policies affect you?

Social

A business is a provider of goods or services, which are inevitably dependent upon demand. The extent of that demand can be greatly influenced by the current social backdrop. It’s not just the high street that is guided by fashion; there are deeper, subtler issues that determine the popularity of prevalent trends.

• High fashion is the most obvious socially influenced sector. It represents a huge market ranging from clothes to music and interior design.
  
• Leisure time is on the increase in our society. More of us have time and money to spend on sport, entertainment and holidays, and the profile of emerging businesses reflects this.
  
• More women are working, resulting in an increased demand for childcare, convenience foods, mail-order/internet shopping, and domestic services.
  
• People are living longer and retiring with more money to spend.
  
• We now live in a health-conscious society, willing to experiment with alternative products and treatments.
  
• We are becoming more socially aware, developing an ethical and environmental conscience and seeking reassurance regarding the origins of the products we buy.
  
• The world is becoming smaller. Business is increasingly international and we live in multi-cultural societies.
  
• The pace of technological advances means that consumers expect increasingly sophisticated products, and they expect them more quickly and at ever cheaper prices.

As a business grows, so will the legal constraints and requirements imposed upon it. Non-compliance can be costly and even illegal; certainly, it’s unwise. Legal obligations take many forms, coming from a variety of different bodies:

• Local authority (regarding land use, pollution levels etc.).
  
• Employment legislation.
  
• Purchase and leasing agreements.
  
• Insurance obligations.
  
• Compliance with industry, institutions and associations.
  
• Trade unions.
  
• Taxation, VAT obligations.
  
• Sales/purchasing contracts.
  
• Legal obligations when dealing in international trade.
  
• Data protection.

Legal misdemeanors, even if proven to be false, can tarnish your reputation and damage your business. Ignorance is no defence. Protect yourself by keeping:

• Informed.
  
• Compliant.
  
• Appropriately advised.

The environment is a high-profile issue in today’s world. Business interests may be curbed by environmental restrictions, or conversely, our increased awareness of both our local and wider environment can present business opportunities.

Environmental restrictions:

• Land use regulations, restrictive zoning, tighter planning regulations.
  
• Restrictive development policies (for example, Green Belt).
  
• Pollution emission levels.
  
• Limited use of hazardous/polluting materials.
  
• Health and safety issues.
  
• Public nuisance issues.

• Development of market niches representing specialist environmentally-friendly products and services.
  
• Availability of grants and sponsorships for positive environmental activities.
  
• Tax incentives.
  
• Favourable inducements for designated areas.
  
• Inducements for use of renewable materials and energy sources.

Technology not only influences what you produce or provide, but how your operation and those of your competitors function.

• If your end-product or service is technically orientated, you must be ready to adapt to advances and innovations in order to remain competitive. Your market knowledge must be sound, with an ability to detect and react to trends.
  
• Information processing and communications functions can streamline and enhance your operation, improving efficiency and cutting costs.
  
• E-commerce represents the biggest single change in business and commerce in decades. No one can ignore it; if you sit on the sidelines, you run the risk of being left behind by your competitors. Each business must consider the extent to which it needs to be involved. Email and a website may be the sum of your involvement. Consider how this may change in the future, including providing an integrated multi-channel strategy spanning in-store systems, telephone, catalogue and online services.
  
• Do you know your marketplace?

A thorough knowledge of the marketplace in which you operate is vital in order to direct business growth effectively. Market research allows you to determine whether your proposed ideas are viable. That is, will your intended customers buy your products or services at a price that will eventually yield profits? Ask yourself the following questions:

• Is there demand for my product in the short, medium and long term?
  
• Is there scope to expand my business?
  
• What do my customers want and do I have the resources to provide it?
  
• Who are my competitors? What can I offer that my competitors don’t or can’t?
  
• What are my competitors doing in terms of pricing, distribution, product development and promotion

The wider market

Business expansion outside of your existing locality presents a range of additional issues, the impact varying with the degree of geographical expansion.

Regional expansion

Breaking into an established, regional marketplace can be a challenge. Some industries have historic origins, resulting in a close-knit business community, with a low tolerance to newcomers. Other areas welcome new investment and innovation. Your main priority is networking; get yourself and your business known and research the competition.

Regional grants are often available to encourage development of economically poorer areas and may represent a cost-effective solution to prohibitive expansion costs in your existing area. In some instances, business functions may be geographically split to optimise regional cost differences.

National expansion

The problems of regional expansion are magnified on a national scale. You may now be selling nationally, requiring a network of sales personnel, distribution routes, and a wider promotional strategy. Alternatively, you may be physically expanding the number and distribution of your outlets. The rate of expansion will be crucial: projected expenditure and income streams must be tightly managed. Your role will evolve; you can no longer do everything, everywhere.

International expansion

Moving into international trade is a major step. Consider your strategy: are you following the lead of a single foreign customer, or planning a programme of expansion into the international marketplace? Some international trade can take place from the security of your own office, but it still brings new facets to consider:

• Exchange rates.
  
• International law.
  
• Language barriers.
  
• Need for foreign travel.

• Cost of employing UK residents abroad.
  
• Local employment issues.
  
• A logistical problem of setting up and running premises abroad.
  
• Compliance with cultural/religious regulations.
  
• Exposure to fluctuations in the economic and political stability of the region/country.

Expanding your business may increase your personal responsibility and required levels of commitment and energy. Your business will not have succeeded so far without an enormous contribution of effort and sacrifice on the part of yourself and those close to you. How do you contemplate stretching this commitment further without reaching breaking point?

Within the business:

• Know your limitations. How many hours a day can you work effectively? Are you managing your time efficiently? Are certain times of the day better for achieving certain tasks? Do you give yourself sufficient breaks?
  
• Delegate. Recruit people who are able to replicate your skills and give them clear briefs, deadlines and feedback. That way you can free up your time to concentrate on doing the things other people can’t.
  
• Implement lines of communication within the business to prevent loss of control.
  
• Surround yourself with competent and trustworthy people. Make sure you offer them relevant and regular training to ensure their skills are up to date and they remain motivated.
  
• Communicate clear plans, objectives and instructions.
  
• Seek advice.
  
• Be open to discussion: air your views and ideas and listen to those around you.
  
• Don’t make unrealistic schedules.

• Set time aside for yourself/family/partners, and respect those commitments.
  
• Build exercise into your regime – watch what and when you eat.
  
• Book holidays in advance, you’ll never take them otherwise.
  
• Take advantage of technology.
  
• Don’t lose sight of your family.

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