If you’ve been thinking about expanding your firm – either by opening a branch office or moving into a new practice area – timing is essential.
One sign you’re ready: you’ve got more work than you can handle.
“Determine if the solution to the high demand is hiring more staff or an entirely new location to keep up with production,” writes business reporter Kaytlyn Mroz. “With expansion on the table, use this opportunity to survey your customers and get their feedback on your expansion plans.”
Important Reminder: you must take care of your current clients. If you don’t do the work on time, you run the risk of a malpractice claim or ethics complaint. Plus you won’t have to worry about expansion, because your clients will go elsewhere.
Another sign your firm might be ready to expand: you have a secure, stable team in place.
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Green Lights for Growth
Following is from Mroz’s article, “Signs Your Company is Ready for Growth:”
You’re hitting your targets. “Start with a common growth indicator like customer acquisition and determine if your company is generating enough business to grow while monitoring customer acquisition costs. Other financial metrics such as revenue growth rate and cash flow are also important.”
Also important: keep tabs on human resources metrics (employee turnover, absenteeism, and employee engagement and satisfaction).
You have a solid team of employees. “Hiring—and sustaining—a team of employees you can rely on is the cornerstone of expansion,” says Mroz. “If you have the right people already in place and can train them to take on new responsibilities once you’re ready to grow the company, you are already ahead of the game when it comes to a successful expansion.
You have enough money in the bank. “Determine if your business has enough capital by using a 13-week cash flow model,” writes Mroz. “This can help you obtain a clear picture of where your finances currently stand while also determining if you could run out of money 13 weeks in the future. If the money is there, ask yourself if it is enough to take on new projects. Even if you check your budgets every day, there’s the possibility that unforeseen expenses could occur when expanding your business. Having enough cash on hand to cover potential losses as well as investments in other businesses will help your business expand.”
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