I remember a line from the movie “It’s a Wonderful Life” when Mr. Potter tries to ruin the Building & Loan by hiring George Bailey away from it. George resists his generous offer at first, to which Mr. Potter complains, “Confound it, man! Are you afraid of success?!” As my business moves away from being a brand-new business toward becoming a successful business I find that I may indeed be afraid of success.
I worry for a couple of reasons. For one, what if the company is only mildly successful? What if we get stuck at a point where we’re making money, but not enough to really make it lucrative for all the partners involved? Is their a ceiling to how large the business can grow? We just don’t know.
Another point of concern is what we should do if we do become successful and don’t see any real ceiling to how far the company can grow. Should we expand our existing store, or should we consider opening a second one? Should we diversify and start a second separate but complimentary business? Do we do some combination of the above?
Some entrepreneurs have the foresight to include such deliberations on either possibility in their initial business plan. Many don’t plan any farther ahead than defining what success looks like for their immediate business. It may be a good idea to devote some thought and research toward answering the following questions:
- How will we determine/recognize if our particular business has a ceiling to how much revenue it can generate at a given location?
- What should we do if we reach that ceiling before we reach a level of revenues satisfactory to all partners?
- How much business can we support at our current location?
- What options are there for expanding the existing location?
- What would be required in order to open a second location?
- What would happen to the initial location’s revenues if a second location were opened?
- Does the company have enough cash flow and reserves to support a second location or business while it reaches profitability?
- What would a “complimentary business” be in your current type of business?
- What would be the ideal management/personnel structure for a second location/business?
These are just a start to the number of questions that should be considered when planning a business venture, or at least before attempting to expand an existing one. Expansion takes time, and reaching the point where a business must expand to survive without a plan for doing so could be devastating to the business. At the very least one should not push forward on expanding the business without having an idea of the cost involved and the level of revenue needed for the expansion to be a success.
Planning is not usually considered the “fun part” of starting a business. But it’s one of the most essential parts. Take time soon to consider whether or not you’re afraid of success–and whether you should be.