Scaling up? The pros and cons to consider when committing to business growth

beggers September 16, 2019 0
Scaling up? The pros and cons to consider when committing to business growth

While business growth may sound like a concept with positive connotations, like with everything, there are also some cons attached. If you are considering scaling up your business, it’s important to realise that you must take the bad with the good.

For the most part, business growth is a positive thing if managed well, and is generally a natural process. When you’re making a decision relating to business growth, remember to thoroughly review all of the pros and cons and examine your goals carefully. Any potential issues, regardless of size, should be underlined.

Pros of business growth

Perhaps the greatest advantage of business growth is the ability to gain on the economies of scale. With business growth comes increased production output, which enables you to decrease costs per unit and achieve savings across the board.

This is because you’re able to purchase in bulk, which generally means generous discounts. It will also be possible for you to spread marketing costs, as you will be able to promote over larger scales. It also means that you can spread staff across a larger output and so administrative costs will fall.

Moreover, business growth will let you increase your resources as well as stock. That increased production output will equate to more sales and, in turn, a larger profit. Business growth should also increase your customer and market reach, resulting in more sales and even future collaborations.

The increase in the size of your business can allow you to influence the market price and put more money back into your business, which is excellent news for future growth. You can also get help with reducing external risks, whether they come from changes relating to technology, fluctuations in the market or risks from competitors.

Cons of business growth

There are fewer cons to business growth than there are pros; however, this does not mean the cons are not able to outweigh the pros. Therefore, cons should be considered with due diligence. If you are expanding your business, it may be that you’re moving too fast, and this can prove very detrimental to your business, as finances may suffer. It can also mean that you’re not in full control anymore, and this can lead to complex logistics. As exciting as business growth may be, the possible cons can make it a daunting task.

When to scale up your business

You should decide to grow if there is a proven growth market for the industry of your business or business model. Similarly, if you have a good cash flow, it may be a good time to expand, and your situation will allow you to do so with minimal repercussions should your expansion fail. There’s also the option of geographical expansion, which will mean new offices – and a serviced office from BE Offices may be the route to follow.

However, a lot of growth will be organic and happen naturally over time. That said, if growth is going to compromise the quality of your business, or you have previously struggled to expand or face financial challenges, then hang fire. You may be excited to grow your business, but it’s important to wait until the right time.





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