Author : Tony Jacowski
Every small business will eventually feel the heat and find the need for expansion. The time will come when the small plans that worked when first starting the business may no longer be sufficient.Understanding What to ExpandThe buzzword 'business expansion' may be catchy to outsiders but as a business owner you need to understand precisely what to expand in order that the scarce resources that you do have are optimized.1. You feel increasing personnel helps increase production to meet growing demand.2. Maximized labor can't cope with the market demand and you have identified that automating business operations would both reduce costs and increase efficiency.3. International demand cannot be met as the business is operating now. Diverse markets need localized service points.4. You need to keep more inventory on hand because price fluctuations don't allow just-in-time procurement. You are contemplating using a warehouse facility for storage.5. Your supply chain is hard pressed; it is difficult to manage with the existing logistics operation.The need for expansion can be a combination of above and you know well that you can hardly push it any further without expanding.Planning Your Business ExpansionHaving identified the exact nature of the expansion needed, the next step is careful planning. Let's examine each of the above cases.1. Increasing personnel doesn't require increased funds. Payroll can be taken care of from the increased revenue from the business.2. Automated machinery calls for extra skills for operating it. Ideally, you would train a few of your best people to operate the machines or hire extra personnel. Normally, the company that was used to procure the machinery will also provide training as needed. Y3. Opening localized service points need not be by buying or renting real estate unless you have explored the possibility of outsourcing. This is where having a website comes in handy. The Internet is by far the best way to reach overseas clients. Also, using this method, your business will be open 24/7.4. Constructing or leasing a new warehouse will increase your asset base but not without a huge investment. You should critically analyze if you can get by with the existing space, maximized by using retractable storage racks, thereby creating more space within your existing warehouse.5. There is no substitute for augmenting logistics. Your options are either contracting out the supply chain or managing logistics yourself.Knowing when and how to expand your business is essential for continued success. If you find that you are struggling to keep up with demand, and certain operations are continually pressed for time, then expansion is an option that you will want to carefully consider.Tony Jacowski is a quality analyst for The MBA Journal. Aveta Solutions – Six Sigma Online (http://www.sixsigmaonline.org) offers online six sigma training and certification classes for lean six sigma, black belts, green belts, and yellow belts.
Keyword : six sigma overview, six sigma process, six sigma definition, define six sigma, six sigma basics
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