April 18, 2022 By Suzanne Robertson

Seeing growth is exciting for any small business owner, but deciding to expand can be nerve-wracking. Roughly two-thirds of the fastest-growing startups fail, proving that growing too quickly is just as detrimental to the future of your business as scaling at a snail’s pace.

Before expanding, it’s essential to assess your business to understand if you have the workforce, cash flow, and overall need to expand at all. Once you complete your company audit, your next step is to grow your small business team while watching your overheads.

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7 Signs It’s Time to Expand

There’s no specific timeline for when you need to expand. Some startups or industries, like real estate, grow quickly, even in the most volatile markets. A Texas office worker can start a new career as a real estate agent, get their license, and expand faster than in their previous industry.

Instead of focusing on time, it’s better to look at key milestones that indicate growth is necessary. Here are 7 red flags that signal it’s time to form a larger team:

1. You’re Losing Business

If you’re seeing an influx of customers refusing to work with you due to slow turnaround times or disorganization, part of your process is slowing down. You’ll need to hire more people to keep up with the demand.

2. You’re Turning Down Work

If you’re turning down work because your plate is so full it’s affecting your productivity, you should decide if more help will pay off in sales.

3. You can Write a Detailed Job Description

If you have enough tasks that could easily fill up an 8-hour shift, you can probably write a detailed job description at this point. That indicates you need another employee to fill a full-time role at your company.

4. You or Your Team are Making More Mistakes

An overworked staff may make more mistakes. To create higher-quality work, you’ll need an extra team member.

5. You Need Someone With a Specific Skill Set

You might start adding different products or services as you expand. If you find that the tasks you’d typically hire a freelancer for have become an ongoing responsibility, it’s time to invest in a full-time employee.

6. You’re Receiving Negative Reviews

If you and your team normally receive great reviews, but recently you’re getting an influx of negativity, you’re likely understaffed.

7. You Haven’t Taken a Vacation

Your small business is important to you, but if you’re so busy that it’s cutting into your sleep and relationships, it’s time to outsource some of your responsibilities. After reducing your workload, make sure to take a vacation to recharge.

You do not need to check off every red flag on the list to determine if expanding your business is the right solution. However, if you’re taking on more work than you can handle, that’s a definite sign you need to start hiring more employees. Otherwise, you’ll begin to lose business.

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How to Expand Your Small Business Team

Even if the signs are there, you need to approach expansion carefully to ensure your large team remains stable. So as you’re growing your small business, take these tips into account.

Consider if Expanding is the Right Choice

A company audit isn’t the be-all and end-all when it comes to making an informed decision to grow. For example, if your business is losing money, it may not be from a lack of employees. It could be that you haven’t hired the best people for the job. Or, you may be biting off more than you can chew.

If you do not have the overhead to expand, you may need to consider if you’re spending money in the right places, or maybe it’s too early. You’ll have to reduce your workload and turn down clients until you’ve made more. Alternatively, you could hire freelancers or part-time staff.

Analyze Strengths and Weaknesses

When growing your team, you have the opportunity to strengthen it. To find people who can improve your team dynamic, analyze your current workforce and compile a list of their strengths and weaknesses. Then, use project management software to gather real-time employee data.

Where does your team speed up and slow down? Could another employee bridge the gap between a productivity lull? What products and services can you add once you hire more employees? Consider these questions during your analysis to find the best solution.

Create a Maximum Hiring Capacity

It’s important to know your ideal team size. A large team requires more management and processes, which initially leads to a dip in productivity. On the other hand, if you hire too many people at once or too quickly, you could spend a lot of time and money onboarding people who have nothing to do.

To determine your needs, you can use staffing and productivity ratios. Staffing ratios depict hiring needs based on established organizational form (5 secretaries for every 20 managers). Productivity ratios estimate the number of units an employee can produce successfully.

Use Technology and an HR Team

Most small businesses can handle hiring independently and do not need help from an applicant tracking system (ATS) or an HR team. However, if you plan to scale your business, you’ll need technology and an experienced HR department to help sort through potential candidates.

ATS software can look through every application for the best match based on keywords, whereas an HR department can interview, train, and onboard candidates. With these inclusions, you can rest assured your business has enough experience and time to find quality employees.

Diversify Your Hiring Practices

Some small businesses may fall into the trap of hiring like-minded team members, and it isn’t hard to see why. We prefer people who speak, look, or act like us because they feel familiar. However, a homogeneous environment is less likely to scale than a diverse one.

You want to challenge your team with new ideas and different perspectives. If everyone shares the same way of thinking, you’ll kill your creativity and, potentially, your business. On the other hand, developing a culture that appreciates diversity and constant development will bring new life to your team.

Improve Your Company Culture

In the growth stage, a bad hire can hurt your business. Being transparent when hiring prospective employees can ensure that you attract the right people at the right time. At the same time, a company culture that brings transparency in the workplace will keep new hires.

Work on improving your company culture by cultivating strong team relationships. Some team members may be nervous about the expansion, but if you’re honest during the process, they’ll feel included. Keep your employees motivated during the transition with positive feedback.

Keep Growing

Small businesses need to continue to grow if they want to increase their sales and acquire new customers. You may face several challenges as you scale, but this guide, along with our other resources in the SmartBiz® Learning Center, will help you nip them in the bud.



About the Author

With a background working for major financial institutions, Rupert Jones is now an advocate of the financial independence movement. A passionate speaker, Rupert believes in helping individuals and businesses achieve financial freedom, and is determined to bring his insights to the world. 

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