Does your start-up have scope to expand?

Photo credit: Wikimedia commons
Photo credit: Wikimedia commons

It’s one thing starting a new business but quite another to scale it up to a level so that it can grow and become financially viable. Starting up a small business is hard enough but when it comes time to grow or expand will your business model be robust enough?

To increase the size of a start-up business and turn it into a full-scale operation means that you possibly need more space, more people and more capital. But even if you have these resources, you might expand your business into a monster that robs you of your time and resources but doesn’t give you the returns you were looking for.

Here’s an example. A small business in India was serving over 7,000 sandwiches orders a day but couldn’t scale up. It was difficult for the business to encourage customers to have sandwiches for lunch. The founders realised that to become a sizeable business they would need 200 outlets with at least 15 employees in each outlet. But that would mean that they would suddenly have 3,000 staff on their payroll.

What did these start-up founders do? This is a challenge that many start-up founders face. The original idea for the business did not go beyond sandwiches and the business, Rocket Sandwiches, just continued to grow in the wrong direction. This is where research of your market and new business ideas are required. Yes, you can tweak your product offering but is it better to close down what you’ve built up and move on to something new? You could, of course, sell your existing start-up and begin a new business.

The founders of Rocket Sandwiches have decided to rebrand and offer customers take-away curries and rice from an an/ Asian menu of 16 items. They will experiment with six or eight outlets over the next year before expanding the business further.

A local entrepreneur who had returned to South Africa from working in the food industry in India and Australia has started up a small vegetarian meals business in a neighbourhood closeby. The owner prepares his own food and then keeps it in a bain-marie. This way he has been able to keep his staff costs to a minimum. He only needs staff to help him prepare the food and once it is cooked anyone in the small restaurant can quickly serve customers by merely scooping the food into a small, medium or large container.

Before planning to launch your start-up, it pays to do some pre-thinking and project what your business would look like if you were to expand into more outlets not just in your local city but in other cities as well. A combination of creative business ideas and knowledge of your marketplace will help you find the best route to take.

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