The four mistakes businesses make when expanding

The transition from a small to a larger business is not simply a matter of producing more; it poses many challenges and requires a long-term growth strategy. Finance, storage, distribution and staffing are just some of the key barriers to expansion.

Storage and materials handling specialist Dexion has identified four key mistakes that businesses often make during this period of transition:

1. Not knowing when to expand.
2. A lack of understanding of the market.
3. Failing to accommodate a larger staff base.
4. Limited foresight when it comes to storage planning.

According to Ross Beaton, Dexion Acacia Ridge franchise owner, not knowing when to expand is the number one mistake that small businesses make.

“We see it all the time - small businesses that have experienced growth suddenly lack the space and resources to accommodate expansion. While many businesses seek financial and management advice, the issue of space and storage is often neglected until it is too late,” said Beaton.

Bill Case, Dexion Liverpool and Alexandria franchise owner, adds that the only way to overcome this challenge is to accept that what may have sufficed for a small business will not be appropriate for a business double - or even triple - the size.

“Businesses must understand how they are growing, which requires regular and extensive planning. It is the only way to avoid a situation where a business has suddenly run out of workspace,” Case said.

They must also maintain a solid understanding of their customers’ needs in the context of a fast-paced evolving market. This is particularly true for the manufacturing, logistics and FMCG industries where today’s customers are more demanding than ever.

“Ten or twenty years ago, the challenge for many manufacturing and FMCG businesses was how to get more product into their warehouses; now it is how to get more product through their warehouses,” said Case.

A growing business requires more staff - while this is a proposition that is glaringly obvious, it is one on which many businesses stumble.

During expansion, attention is often directed to the financial aspect of investing in new staff, while little or no consideration is given to how these staff members will be accommodated in the existing facility.

Transitioning businesses must accept that the storage needs of a larger organisation are very different to those of a small one. Trying to adapt the latter to the former will never work. The only way to avoid running out of space is by adequate forecasting.

Although it is difficult to predict where a business might be in five years’ time, there are steps that can be taken to avoid a situation of outgrowing a facility just 12 or 24 months after moving in.

“Again, it comes back to forward planning, which means choosing the right facility from the outset - one that has the capacity for increased storage space,” said Case