When you only have 1 to 15 workers, managing your small business is easy. The founder generally knows each employee, and they can provide one-on-one training. However, as you grow, you’ll have to make major changes to how you manage HR, payroll, onboarding, and other business practices. There are a few common signs you can look for if you’re struggling to figure out when to expand your business.
Top 7 Signs Your Small Business Is Ready To Grow
Recently, Mission to Grow delved into the topic of small business growth for businesses with 1 to 15 workers. Mike Vannoy, Asure’s chief marketing officer, discussed some of the things companies have to do as they prepare for ongoing growth. “Make sure that you have the right infrastructure in place for that stage. We also want to make sure that you’re controlling costs. You’re not overbuilding unnecessarily. There’s sequencing to some of the things that you need to do as you make a growth plan for your talent strategy and all the compliance requirements that come with that.”
Before you can prepare for future growth, you have to determine when to expand your business. Your company must be prepared for growth before it tries to increase sales and revenue. Read on to learn the top signs your small business is ready to grow.
1. You Need an Employee Handbook
As you grow, it will become harder and harder to remember the answer to each policy question. Early on, you may have just given an answer off the top of your head when someone asked about how much vacation they receive. After fielding three different questions about vacation time or paid leave in the same week, it’s time to consider solidifying a written policy that all of your workers can consult. Besides making life easier for you, creating an employee handbook also ensures that you are being consistent in the answers you give to all of your employees.
2. You’re Considering Your Onboarding Strategy
Early on, the founder often handles all of the hiring and onboarding. They know the business inside and out, so they don’t need a manual to tell them which training points to hit or common pitfalls to watch out for.
As the business grows, the founder won’t have time to train every employee. To ensure a consistent onboarding experience and high-quality training, you’ll need to create an onboarding strategy with standardized training materials. If you’re already starting to realize that you need to update your onboarding plan, it may be time for your company to take the next step.
3. You Need Workers Who Can Specialize in Different Roles
When you first started your small business, you had 10 ninjas who were jack-of-all-trades and able to play many different roles in your organization. It may be time to grow your employee base if you find yourself needing people who specialize in specific roles, such as one person to handle payroll and someone else to manage your HR tasks.
4. Customers Are Starting To Seek You Out
If your customer demand has increased, it may be time to take the next step. For example, you may have new customers who heard about you through word-of-mouth referrals. Existing customers may ask for more products or different product lines.
When this happens, it indicates that there is a larger demand for your goods and services than you are currently satisfying. If you decide to keep growing your company, you’ll have plenty of willing customers to buy up your new offerings.
5. Your Current Systems Aren’t Working Anymore
Another way to tell if you should grow your organization is by reviewing your current systems. Early on, a lot of small businesses rely on the founder to interview applicants, cut payroll checks, and train new hires. Once you reach 10 to 15 workers, this type of founder-led approach just won’t keep up with the existing demand. You’ll need to adopt formalized procedures, professional software, and other tools to ensure your business practices match your stage of growth.
6. There Are More Opportunities in Your Industry
When there are new opportunities for growth in your industry, you should update your business plan. For example, there may be a new geographic area, different customer segments, or new product options. New opportunities mean you’ll have the revenue you need to fund your expansion. By growing your market share, you can crowd out your competitors and find new avenues for developing your brand.
7. Your Existing Labor and Resources Can’t Keep Up With the Current Workload
Finally, it may be time for an expansion plan if your existing labor and resources can’t keep pace with your workload. If you’re constantly having to run extra shifts or don’t have enough space in your existing manufacturing center, you’re ready to grow.
Key Challenges You’ll Face During the Early Growth of Your Small Business
While growing your business is an exciting step, there are a few key small business challenges you’ll likely face along the way. The following are just a few of the most common challenges experienced by startup companies in their early stages of growth.
Hiring the Right People
As Mike Vannoy pointed out, “The war for talent is very, very real. There’s a labor shortage that many of us feel. Sometimes, the next warm body that steps in the door, you’re going to hand them a work apron and put them to work.” However, there’s a risk of missing important things, like I-9s and proper onboarding procedures in the rush to hire new workers.
Legal Compliance
Even small businesses are held to the Fair Labor Standards Act (FLSA), many anti-discrimination statutes, and other legal regulations. Businesses of every size and shape are also required to submit tax withholdings. Plus, there are many different requirements for I-9s and other forms. If you don’t fulfill all of these compliance requirements correctly, you can end up facing stiff penalties.
Client Dependence
Another one of the most common small business challenges is client dependence. Sometimes, small businesses will have only one or two large clients. If this work dries up suddenly, your company will struggle. To avoid this issue, it’s important to diversify products, services, and clients as your company grows.
Insufficient Business Plan
Your business plan guides your growth. By setting goals and milestones, you can figure out which steps you need to take as you build your business. If you don’t plan ahead for future growth, you’ll have to act reactively to problems as they develop.
Customer Acquisition
Finding customers is a challenge for small businesses. Most small businesses can’t afford the same marketing plans as large corporations, so they have to be strategic about how marketing dollars are spent. As long as they are known for providing high-quality goods and services, small businesses can easily stretch their marketing budget through word-of-mouth referrals.
HR and Payroll Management
Unless you’re a payroll and HR expert, it can be difficult to calculate withholdings, manage performance reviews, and handle wage garnishments. Through a payroll and HR provider, you can get the right software platform and expert advice on how to handle these challenging tasks.
Prepare Your Small Business To Take the Next Step
By paying attention to a few key signs, you can determine when to expand your business. Once you’re ready to expand, the next step is building the policies and processes that will guide your company’s future. For example, small businesses should take some time to build an employee handbook, set up payroll software, and run a compliance audit.
If you’re ready to plan your business expansion, reach out to our team of small business payroll and HR experts today.