By: Wendy Manjeya
While expansion promises growth, increased customers, and a larger team, small business owners must carefully consider the challenges when expanding their businesses, according to Palesa Mabasa, who is the business development head for SME funding at FNB Commercial. She warned that a hasty expansion could harm a company and careful planning was imperative before taking the leap.
Mabasa said that owners needed to ask themselves seven questions before expanding, including could their business handle the increased demand. “Failing to make payments can destroy relationships and create long-term procurement problems,” Mabasa warned in a statement. Additional demands on a business would not only be financial. “You have to ensure that you have the necessary physical infrastructure, such as stock rooms, floor space, and fleet, as well as a team of well-trained staff that is ready and able to support the growing business,” she said.
Small enterprises needed to ensure that their suppliers were up to the task. “Customers don’t care that a supplier let you down – they see it as a failure to deliver on your part,” said Mabasa, adding that it was vital to assess current suppliers and, if necessary, seek out new partnerships that aligned with growth objectives. Another question to consider was if a business’s governance framework was robust enough.
She said that as a business grew, so did the need for comprehensive policies, procedures, and legal compliance. Therefore, it was important to review current governance structures and ensure they could accommodate the increased complexity that came with expansion. Also, SMEs needed to establish a strong support network before expanding. Mabasa said that no business operated in isolation and support networks, including financial, legal, and tax advisors, could be invaluable during growth.
Just as importantly, an owner had to be prepared to manage a growing team. She said expanding a workforce required robust human resource management and a clear HR strategy for a harmonious and productive work environment. Small businesses also had to consider the impact of expansion on their brand because as they grew, so did the brand’s exposure.
