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How to Tell Whether It’s Time to Expand Your Business

You started your company with a bankable idea, a tiny space, and an even smaller group of employees. Like many entrepreneurial beginnings, maybe it was just you and one other person in a home office or garage. But lately, that smaller space and team don’t seem enough to handle the business coming your way. Is it time to expand your business?

You’ve been thinking about expanding and are excited about the possibilities your decision might bring. For example, the company could open another location, serve more customers, or venture into new product lines and services.

While your enthusiasm is growing as you drum up new ideas, you’re unsure whether now is the right time. So how can you be confident that expanding your business is a smart move? First, let’s look at some of the signs that it may be time for your company to branch out.

Industry and Market Opportunities Are Increasing

If your industry is taking off, there’s a good chance your business can capitalize on that growth. Changes in purchase behaviors, new tech developments, or market forces can create expansion opportunities for existing business lines. Sometimes this means creating new products or services that piggyback off current ones, or it might signal the need for bolder strategic decisions.

Nurx, a telehealth provider that started offering online birth control, recently decided to provide mental health treatment options. The expansion move resulted from rapid growth in the mental health space, increasing interest in telehealth services, and a strategic decision to help develop them. While the company’s birth control service line was well established, its leaders recognized that mental health patients desired the same privacy and convenience.

When it comes to health care, making appointments, locating clinics, and visiting pharmacies can become barriers to access. A broader range of telehealth services expands care access and removes many of those barriers, especially in remote areas. Increased use of telehealth services during the pandemic also acclimated more patients to its conveniences. All these factors presented an opportunity for the company to improve care access in various locations and become a part of the solution.

Volume or Demand Exceeds Current Capacity

You’ve consistently got more orders and work than your staff can handle. While that may seem like a good thing, it also means you have to turn work away.

Alternatively, you can take longer to fulfill customers’ orders or reduce quality levels. None of these options work in your company’s favor, as existing clients will grow frustrated and disappointed. Eventually, word will get out, and negative perceptions might make it difficult to retain current customers or capture new business.

When volume, demand, or customer need outpaces your company’s capacity for fulfilling it, expansion plans should be on the table. What if Amazon hadn’t increased the number of its fulfillment centers, distribution nodes, and employees? The company wouldn’t be the online retail giant and technology solutions provider it is today.

Between 2010 and 2018, Amazon’s workforce grew from 33,700 to 647,500. This headcount growth supported business expansion efforts into new markets as demand for products and services increased. Although not every business experiences identical demand rates, aligning internal capabilities with external expectations is a must.

If a business is picking up, it’s time to reevaluate your operational and product strategy. Seasonal surges might call for hiring temps or contractors. But overflowing stores and overworked employees often signal the need for additional locations and extra permanent staff. Customer demand for more related products and services might mean it’s time to hire more employees with matching expertise.

Your Business Has a Single Cash Cow

Relying on a single product line or one client for most of your revenue could mean it’s time to expand. Overdependence on one line of business can lead to future financial problems.

If you’re a brand-new startup, this might not apply to your situation. Many businesses begin generating income with a single service, product, or customer. But overdependence can become a liability if it’s been several years since you opened your doors.

While that client or product might be bringing in most of your revenues now, what happens if they go away? The customer’s needs could change, and they could decide to move in a different direction. Your client might go under, merge with another company, or cut costs — one of those cost cuts might be what your business offers.

Products and services can also fall out of favor or become obsolete. Losing your cash cow can jeopardize your company’s financial sustainability. It’s vital to keep these facts in mind as you seek to expand your business.

Expanding your offerings and client base is like diversifying an investment portfolio. You reduce the risk of loss by decreasing your dependency on a single revenue source. And your company potentially increases its exposure to various industries and markets with balanced threats and opportunities.

Business is Plateauing

All products and services go through life cycles. Successful offerings typically launch with a healthy dose of fanfare. They catch on quickly and sustain growing adoption rates. Yet that growth eventually reaches its peak and plateaus. Some products and services can stay in the plateau stage for a while before sales start to decline. But others fall off more rapidly, causing leaders to have to decide whether to try to revive or discontinue them.

Slowing sales and declining interest in your company’s products and services could be additional signs that you need to expand You might not be ready to stop producing an item yet. However, you need to ramp up a replacement for when you do. Examining market signals, customer feedback, and sales numbers will point you in the right direction. Is there growing temporary demand for a substitute, or are market disruptions pushing products and services like yours out?

With disruptive forces, you’ll need to act more decisively. Kodak is an example of a company that largely ignored technology changes and new inventions that reshaped the photography landscape. Leaders banked too much on Kodak’s existing core strengths and products and missed the shift to digital photography.

Although the firm dabbled with the idea, it failed to fully invest in digital product expansions. Instead, resources remained concentrated on conventional product lines. Recognizing the signs of plateauing offerings and the need to expand to meet market changes can literally save your business.


Many business owners struggle with the idea of expanding their core products or services. Besides research and development costs, there’s the question of timing. Uncertainties about whether the market will accept your new offerings and whether you can reasonably fulfill those needs may arise.

Although success could involve some trial and error, recognizing specific signs can help business leaders make profitable expansion decisions. Your company might be ready to expand if industry opportunities are on the rise or your volume exceeds current capacity. Additional signals include an overreliance on a single product and plateauing sales.

Acting on these hints that it’s time to make changes can increase your company’s chances of coming out on top.

Image Credit: Andrea Piacquadio; Pexels; Thank you!

Brad Anderson



ReadWrite is the leading media platform dedicated to IoT and the Connected World. We work with the industry's top technologies, thinkers, and companies to tell the stories that drive this world forward.

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