5 Warning Signs For You To Immediately Stop A Business Expansion

5 Reasons You Should Immediately Stop A Business Expansion Plan
5 Reasons You Should Immediately Stop A Business Expansion Plan

As any small business starts out, the ultimate long-term goal of the founder is to someday grow his or her new startup into a conglomerate. Aspiring to great feats is important for every entrepreneur that’s serious about someday running a million dollar or maybe billion dollar company.

While starting a small business and quickly implementing a business expansion plan is great, not going about it the right way can tank your investments.

How then can a business expansion be bad for a company? Why should any entrepreneur be worried about their business growing too fast?

Before setting up more business locations in your city, state, country, or anywhere else around the world, several key factors must be considered to ensure you meet the right criteria for a business that is due for an expansion and is healthy enough in its present environment, before seeking more prospects in distant locations.

See Also: Top 10 Mistakes To Avoid When Starting An Online Business


Here Are 5 Warning Signs That Mean You Need To Immediately Stop Your Business Expansion Plan And Fix Your Company:


1). You Take Loans And Investments To Make Ends Meet:

Once your business can only survive on loans and investments to generate recurring revenue with no real profit plans yet, trying to expand to more locations could be a big mistake.

Before you set up a new branch for your small business, first ensure its current location is self-sustainable without more than a modest loan or an investment.

If your business turnover in its current location is pretty low, opening a really small-scale branch in a different location could be a wise decision for a test, to see if that new location has a good number of prospects interested in what goods or services you have to offer.

Your business expansion plan should be stopped immediately, if your daily operations can only be sustained with a loan or an investment.


2). Your Business Goals Are Getting Off Track:

What’s your company’s mission and vision? What exactly did you set out to achieve when you started your small business?

Straying to newer territories can both be tempting and exciting for entrepreneurs, but when you stray too far off from the major goal of your core business, your original product or service suffers. If the new venture you strayed into fails or becomes too expensive to sustain, you could have already lost your original clients, your original product’s or service’s credibility, and possibly your entire business line.

Expanding your business to cover newer territories and categories could be highly rewarding to some entrepreneurs. But to many others, it could be the end of a long streak of success.

See Also: The 5 Powerful Investing Tips That Made Nigeria’s Aliko Dangote A Billionaire


3). Your Customer Service Is Poor:

If your existing customers are unhappy with the service you provide on a small scale, expanding or growing too fast would eventually put you out of business.

The customer is the most important element in any business. Keeping them happy is important to the growth and success of your company. This is the core reason you have to do everything possible to ensure they receive the best service no other company can provide except yours.

Your small business expansion plan should only be considered if your existing customers already serve as mouth-pieces for your business.

Make your customers happy, and they’ll make you more money. Then, you can expand.


4). You Lack The Right Team And Resources:

It takes the right team to achieve the greatest feats. Behind every successful entrepreneur, are a pack of smart individuals who put in their time, creativity, and efforts to make a dream they collectively believe in come true.

If your current team is rock solid, and have so far been carrying out great executions which have subsequently led to increased sales and more customer acquisitions in your current market, a business expansion is the next best course of action.

See Also: You Will Fail As An Entrepreneur If You Do These 5 Things


5). Your Focus Is On The Short Term:

As your business experiences growth, you would naturally get excited about the profits or revenues you’re generating. While achieving profitability is important for every small business, it’s key that the real focus should be placed on the long-term, and not what you’re turning in right now.

Short term profits can mislead some entrepreneurs into believing all is entirely well with their small businesses, and thereby motivate them to rapidly expand to lots of newer locations based on their exciting calculations of generic multiplied profits.

Before you take a step towards carrying out a business expansion, you need to first have a solid foot-hold in your present market, and be darn sure that the profit margins generated from this location is sustainable, before you implement your business expansion plan.

Next, instead of opening up branches in multiple locations at the same time, do a good feasibility study on the market potential of various new locations, then open instead, a small branch in your best pick.

If your revenues and profit margins achieve a positive growth, you can setup a larger branch in that location. When the new branch grows stronger, you can then try out another new location.

See Also: 15 Profitable Small Business ideas for Beginners in 2016


Finally, spreading your small business along multiple markets really fast could sound tempting to so many entrepreneurs, especially when the funds to execute this business expansion plan is available.

Instead of falling into the misfortune that this move could most-likely create, expand rather slowly, smartly, and cautiously. As you do this, you’d have a far higher chance of raising a large company with several highly profitable branches.


What are your thoughts on this article? Please let me know by leaving a comment below.


Image Source: esquire.com.ph

Stan Edom
Stan Edom
I'm an entrepreneur with expertise in supply chain management, international trade, small business development, e-commerce, internet startups, renewable energy, and agriculture. I'm also a network engineer, I.T security expert, and computer programmer. In my spare time when I'm not working out at the gym, I try to solve problems people face in their everyday lives with whatever means necessary.

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  1. Nice one, Taught for note. this seems more suitable for SMEs. The mega and multi million dollar companies will fine it easier to explore aggressively new grounds and environments where opportunities present.

    • Thanks for the comment Victor.

      In different situations, the rules could change. But most multi-million dollar companies still have to be careful to avoid turning into multi-million dollar failures because of unnatural rapid expansions, like several American companies that received over $40 million dollars in funding but still failed.

      Thank you for your comment.

  2. Common !!! this is something.I just got another light to expansion principle and besides you ve been feeding me with lots of business ideas and motivation.
    But please am thinking of starting a movie cinema business from scratch, would be glad if u can send me some first class materials on it. thanks

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