Every thriving business may seek to expand, and those in the moving industry are no exception. However, as alluring as bold, firm expansion may be, it can often be reckless. Indeed, CEOs will at times advance carelessly, which frequently doesn’t bode well in the long run. Furthermore, the moving industry differs substantially from other industries, and thus calls for a calculated approach to expansion. It stands to reason, then, that you should establish firm criteria for expanding your moving business and adhere to them. In this article, Movers Development will explore such criteria, and analyze a prudent course of expansion from start to finish.
When should you be expanding your moving business?
Expansion tends to come naturally, following substantial business growth. While this applies to all industries, in slightly different degrees, the moving industry arguably presents distinct challenges. From starting a moving company to elevating it to an established pioneer among its peers, fierce competition abounds. The criteria for expanding your moving business should thus entail this fact, especially if you are particularly risk-averse.
At its core, the perfect time to expand presupposes three main factors:
- Your business is well-established and experiences steady growth
- Your industry experiences growth
- You can finance and sustain the expansion internally
That is by no means a thorough list, however, nor are those the sole criteria for expanding your moving business. Thus, a thorough, step-by-step analysis should yield much more actionable information.
An established business
The very first criterion should be how well-established your business is. Upstart businesses rarely need or can afford to expand, while an authority on the industry may safely consider it. This may seem like a self-evident factor to acknowledge, but it is not uncommon enough to not bear mentioning.
Therefore, it is wise to work towards fulfilling this criterion before considering expanding. Namely, improve your digital presence, upgrade your local SEO, and enhance your marketing efforts to acquire moving leads more efficiently. Perform SWOT analyses on your local competitors to outperform them, as you get a firm hold on your local market. The moving industry entails competition, and any established moving business needs to diversify itself from its peers to thrive. Once you have done so, you may more safely consider expanding your moving business.
Customer demand may warrant expanding your moving business
Increasing customer demand can also inform your decisions in this regard. Across industries, customer demand that warrants expanding is easy to identify; demand that surpasses the ability to supply. Few criteria for expanding your moving business are as clear-cut as exceeding demand.
In the moving industry specifically, such demand has many forms. Namely, it may include any of the following:
- A need for more physical locations
- Demand for expanded services
- A need for more warehouse facilities
Any of the aforementioned, as well as others, might be a clear indication that your moving business needs to expand. More physical locations will allow you to expand your area of operations – perhaps even outside of state lines if demand warrants it. Likewise, more warehouse facilities will allow your storage services to appeal to a larger customer base due to physical proximity. Expanded services, such as white glove moving or international relocations, will allow you to better satisfy your customers’ needs.
Such aspirations, and others, will, of course, need careful evaluations to advance properly. It may be a bigger truck fleet that can best meet the increased demand or an enhancement of your warehouse security and inventory software. On the front of human resources, you may ideally need an increase in personnel size and expertise – as expansions often do warrant. Regardless of your optimal means of expansion, however, customer demand will indeed dictate whether you should expand your business.
Identifying growth in the moving industry
Perhaps due to the nature of its services, the moving industry closely reflects the strength of the economy. This is likely a self-evident correlation; relocations become a less feasible, appealing option when framed by a weak economy. A thriving economy, however, presents more employment opportunities and more disposable income, both of which drive a sizeable portion of the industry. In the case of the US, for example, the industry saw steady annual growth since the Great Recession concluded. However, the COVID-19 pandemic is expected to incur a decline of over 3% for 2020, and further projections vary. Such dire, unforeseen circumstances are of course rare, but one does need to acknowledge their impact and plan accordingly.
Such circumstances aside, once your established business ascertains increased demand, observing how the moving industry fares can provide additional assurance. You may note growth within your business’s local market, but it may only be circumstantial or temporary if the industry does not reflect similar growth. Therefore, the relocation industry analysis suggested by many should help quantify actionable growth. Consistently promising results can indicate reliable industry growth, which is among the safest criteria for moving business expansion.
Ensuring financial stability and optimal debt management
Lastly, as with all business ventures, you will need to ensure you can financially support an expansion. You may have an established business in thriving moving industry, with a consistent customer base whose demand warrants expansion. However, the bottom line remains, and so should your concern over properly financing such endeavors. Thus, you should likely consider financial stability strongly among the criteria for expanding your moving business.
To begin with, expansions always carry increased costs by definition, be they for facilities, equipment, or personnel. You should thus ensure that your endeavor will have a sufficient financial benefit to cover such expenses. Ideally, your cash flow should support your expansion with little to no external assistance. Should you need a loan or infusion, you will need to ascertain you can repay it in a timely manner.
On this front, accumulated debt is notorious among the factors that can prematurely defunct expanding businesses – and understandably so. You should thus try to begin your venture debt-free, or at the very least minimize your debt before you do. If left unchecked, debt can accumulate rapidly, leaving bankruptcy or liquidation as the only final, unfortunate solution. While aggressive expansion can present such risks, a calculated, prudent approach can help you expand slowly but surely.