Successful businesses of any size reach a point where the owners must decide if they want to expand by opening new franchises, either domestically or internationally, or by opening the business to online trade. Family-run businesses are no exception to this.
Reasons to expand a family business
What started out as a relatively small operation may need to expand to accommodate the increased volume of customers. This kind of expansion may be physical, for example literally enlarging the existing store or restaurant to handle the rise in business. It may also include opening up more locations in different parts of the city, or even expanding into other states.
Expansion of a family business may be necessary to appeal to a larger base of customers. Adding new merchandise to a shop is one way to do this. Family restaurants may find that adding specialized menus for children or people with special dietary needs is beneficial to business.
Family businesses may also want to explore the option of franchising, effectively turning what was once a small business into a large one by allowing people to open new locations of the same restaurant or store. This allows the business’s brand to expand and produces additional income for the original owners.
Family business expansion issues
Many of the difficulties that arise when expanding a family business involve the change from the family directly running the business to people outside the family being in charge and in control. Establishing accounting procedures to monitor cash flow in the various locations is vitally important and reviewing these reports regularly prevents problems with bill payment, inventory and such.
The addition of new personnel may also be an issue when a business expands. Taking the time to refine the hiring process and ensure that talented, hard-working, reliable people are selected for the available positions is the key to assembling top-notch staff. This is especially important when selecting new managers, as the manager will be the person in charge on-site representing the owner in most facets of running the location.
The increase in locations and staff means an increase in bills, taxes and payroll. Many owners may find this increase overwhelming to such an extent that it effects the business itself in negative ways, even resulting in the business failing. One way to prevent this from happening is to consider seeking the oversight and protection of an umbrella company. An umbrella company may assist the small business expansion in a number of ways, including handling the increase in payroll and any related issues, as well as seeing to it that bills are paid on-time and that taxes are taken out appropriately.
Ways to manage a family business expansion
The key to managing the expansion of a family business is to make sure that it does not expand too quickly and that the expansion is properly controlled. To accomplish this, the owners must have a solid plan for expansion and must stay within its parameters. Making any changes to a business without this type of solid game plan could result in very costly mistakes that can affect the business organization to its foundations.