Expanding......Harder that starting up?

[fridaypassion]

Well I guess its a nice problem to have but a bit of background we had a small business (Sports car sales and parts) that we managed to make full time in April last year. Its been a busy couple of years and we've moved it out of home to a small lockup and then into a 1000SQFT unit with a 500SQFT mezzanine.

The current situation is that I am there full time, I have a couple of people I can call on if I'm busy but we are at the critical stage at the moment where we either throttle back a bit and be sensible about the amount of stock we carry and other work we take on or realise the potential of taking on some help to take the load off me which would require moving into a bigger unit, taking on business rates which we are currently exempt from, wages etc. I'm agonising if we would just be peddling even faster to stay financially in the same position. My main issue is that I'm not a throttling back type but at the same time I dont want to make a bks of everything we have built up over the last 5 and a half years.....

I have the option of taking a bit of additional storage space which might be a stop gap but I dont think it will solve the conundrum. The current setup ultimately gives us a good living. We have a sensible house/mortgage and no interest in moving so we dont "need" to expand but can I help myself?......Tales of Woe in the same situation much appreciated

[surveyor]

No tales of woe, but similar situation. I'm running really hard, and not chasing every business opportunity at present, but taking on staff means a whole extra level of commitment and ball-ache.

[fridaypassion]

Yeah luckily I have someone I know I could take on that would be useful/trustworthy etc its just the amount of additional business needed just to take a full timer on..eek!

[bearman68]

Same position. Really difficult to make that jump to employing someone.

Perhaps it would be worth putting (say) £500 a week aside, through thick and thin to see if you can afford it. If you struggle to put it aside, you'll struggle to pay wages.

Not sure there is a right answer to be honest.

Best of luck anyway.

[Loaghtan Target]

fridaypassion said:

Well I guess its a nice problem to have but a bit of background we had a small business (Sports car sales and parts) that we managed to make full time in April last year. Its been a busy couple of years and we've moved it out of home to a small lockup and then into a 1000SQFT unit with a 500SQFT mezzanine.

The current situation is that I am there full time, I have a couple of people I can call on if I'm busy but we are at the critical stage at the moment where we either throttle back a bit and be sensible about the amount of stock we carry and other work we take on or realise the potential of taking on some help to take the load off me which would require moving into a bigger unit, taking on business rates which we are currently exempt from, wages etc. I'm agonising if we would just be peddling even faster to stay financially in the same position. My main issue is that I'm not a throttling back type but at the same time I dont want to make a bks of everything we have built up over the last 5 and a half years.....

I have the option of taking a bit of additional storage space which might be a stop gap but I dont think it will solve the conundrum. The current setup ultimately gives us a good living. We have a sensible house/mortgage and no interest in moving so we dont "need" to expand but can I help myself?......Tales of Woe in the same situation much appreciated

For me the answer was yes, a lot. I tried, it hurt me a lot, I made less money, I'm going back to one job at a time. A lot of this for me was business sector specific, for me the biggest problem was I couldn't be in multiple places at once and the work we do is so detail heavy if you're not there things can go wrong very quickly. Even the best staff will generally not think of the bigger picture - if you find one who will make them a partner. If, as it sounds, you will be able to work alongside your staff daily then you will be able to stay in control, probably, but as you guessed possibly not make any more in the short term. When things were at there worst for me I was chatting to a client who employes 200 people all over the world and he told me straight, if I kept expanding I would just have to accept I wouldn't always get what I wanted. I knew he was right so I decided to go back because what we produce is very important to me.

[fridaypassion]

Yes this is a key thing for me its my name above the door (the Ltd company name is my name not the web address on my profile) Ultimately there has to be an element of control freakery over it because we all know the importance of maintaining standards. Another angle is just to take on help with still slow growing expansion but enjoy the benefits of not running round like a madman?

[Loaghtan Target]

fridaypassion said:

Yes this is a key thing for me its my name above the door (the Ltd company name is my name not the web address on my profile) Ultimately there has to be an element of control freakery over it because we all know the importance of maintaining standards. Another angle is just to take on help with still slow growing expansion but enjoy the benefits of not running round like a madman?

I don't want to put you off but from my experience I can tell you almost for sure that taking on staff will mean more running round like a mad man, not less in the short term. I got to five staff full time, and it basically meant I spent most of my time either keeping work in front of them, sorting out problems they either couldn't or wouldn't sort out themselves (the majority of which could have been avoided if they'd planned ahead), or dealing with all the other nonsense that comes along with it - it's just general management, but I hated it. I got to the stage I was virtually never actually doing the work I started the company to do. Turnover jumped from less than £100k to over £1m but we made less profit because efficiency went out the window. We had so much work I could probably have addressed the efficiency issues, and we did start to look at restructuring and taking on management staff, but there were other problems. Some people leave the shop floor and never look back. These people probably build big successful companies, but part of never looking back is accepting that the people you've left on the shop floor probably aren't doing things the way you want them done. A lot of people don't have a problem with this and / or enjoy great profit to ease the discomfort. I don't have a problem with that really, it's the way it has to be in a lot of sectors. I gave up a lot to run my business the way I wanted to and produce the stuff we do, so for me the only way was to hold on to that and accept that my business needs to be small.

Things I think I got right...

First employee - part time admin. That's the stuff you really don't need to be spending time on. I hate admin.

Second employee - young person you can break and then mould to how you want. I was very lucky here, this was a young cousin of mine - I could be more nasty to him as he was family. 17 when he started and useless. He's now brilliant. People with more experience are great, but that also means they have there own ways of doing things, which you may not like (I don't).

Things I definitely got wrong...

I'm far more interested in the product, and the customer than I am in profit. I never pushed my admin for details because I didn't care really, I was addicted to work not money. If you decide to go for it make sure your accounts are 100% water tight before you do anything, account for every penny (I mean every penny) and get regular reports. When it's just you this stuff doesn't seem to really matter. When it grows it really, really does.

Your staff will never see the work the same way you do. Do not fool yourself. I am gradually learning to accept that I can't always get what I want, but I'm also getting back to spending more and more time on the shop floor to ensure that it's a close as it can be.

Good luck!

[akirk]

although it is a generalisation - there is a rough rule that:
- you can make a profit on your own
- as you grow, the costs (your time managing / getting in sales / admin / overheads etc.) grow faster than the income over the next xx-yy people you employ...
- grow above yy whatever that figure is and then your profits grow faster

xx and yy are different for every business sector - so for example in my business, on my own I made profit - I then employed another two people and my personal profit dropped as I was spending more time managing / getting sales, so in effect we had only two people actually income generating - to grow further meant getting offices etc. and really meant needing 6-8 people in the company, so my values for xx and yy were 2-8, i.e. at 1 or 9 I was laughing - but growing through 2-8 was a risk

you then have to make a decision as to which side you wish to be, for me I didn't want a company of 10+ people - in my industry it changes the nature of work you do away from the niche we sit in... and is much more at risk of economy changes... so I changed, brought in a partner who is flexible on work, and that has been successful, we then employ others ad-hoc when needed, so have several more regularly on our books, but only used ocassionally

but you really do need to decide whether you want a bigger company - i.e. what shape company are you aiming for - and why, to sell out / make money / ???
will staying small affect business / will growing help with scale of economy on purchasing etc.?

[fridaypassion]

Thanks for the above posts most informative and food for thought.

I have no grand ambitions to be honest I know thats not good entrepreneur speak but the initial aim was to just be able to work for myself and stay away from my old job. We did that and have managed to avoid the Mrs having to go back after maternity as well. Having 3 kids is not cheap so we can manage that withuot stress rather than pushing have a huge sprawling house and keeping up PCP payments on the Jags and that kind of thing.

Couple of other complicating factors - I'm just about to set up another company although I'm a director I wont be in that company day to day. I cant say much on a public forum but its related to my main business. With the best will in the world I know it will still take up some more time. Also I have some health complications that mean at some point I will have to stop working for about 6 months. At the moment we could shut up shop and just pick up where we left off but that would be very different with staff/bigger premises.

I think I might have to see the benefit more in free time and making other aspects of the job easier rather than thinking right if we take on Tony we'll make another 30k per year from him and that kind of line of thinking. I dont think it would really work like that although we could improve our throughput by me having more time to buy stock.

I've put in some enquiries about bigger premises today but the agents never seem to come back to you! We also have another slight issue in that a lot of places wont allow auto trade even though we are at the smart end.

Its really becoming a bit of a strain trying to decide what to do!

[akirk]

fridaypassion said:

...

I have no grand ambitions to be honest
and have managed to avoid the Mrs having to go back after maternity as well
we can manage that withuot stress
With the best will in the world I know it will still take up some more time.
Also I have some health complications that mean at some point I will have to stop working for about 6 months.
the agents never seem to come back to you!
a lot of places wont allow auto trade even though we are at the smart end.

Its really becoming a bit of a strain trying to decide what to do!

sorry for the selective quoting - but I think it emphasises that you don't need to be stressed - you have your decision clearly laid out...
don't apologise for it not being entrepreneurial - the best businessman is the one who builds the business best suited to his / her goals
the world puts a lot of pressure on to people to believe that it is only by making money / increasing your business size / etc. that you are successful - nonsense, success is setting out what you want and achieving it

I would suggest from what you have posted that you would be silly to expand with:
- higher costs
- higher risks
- no knowledge of what might happen
etc.

it sounds as though you have a great business as it is - unless you want to push through to be much bigger, stay content with what you have

[Frimley111R]

Interesting thread, my thoughts are that some people are managing a business and some are expanding by finding people to help them do what they do but struggle with the lack of commitment and sometimes quality. IMO you have to access this although keep a tight as control as you reasonably can and certainly having the right staff helps. I manage our business but don't do the work and that helps me a lot. i support all our team and make sure that process are refined, standards of service are maintained etc.

[bearman68]

fridaypassion said:

Thanks for the above posts most informative and food for thought.

I have no grand ambitions to be honest I know thats not good entrepreneur speak but the initial aim was to just be able to work for myself and stay away from my old job. We did that and have managed to avoid the Mrs having to go back after maternity as well. Having 3 kids is not cheap so we can manage that withuot stress rather than pushing have a huge sprawling house and keeping up PCP payments on the Jags and that kind of thing.

Couple of other complicating factors - I'm just about to set up another company although I'm a director I wont be in that company day to day. I cant say much on a public forum but its related to my main business. With the best will in the world I know it will still take up some more time. Also I have some health complications that mean at some point I will have to stop working for about 6 months. At the moment we could shut up shop and just pick up where we left off but that would be very different with staff/bigger premises.

I think I might have to see the benefit more in free time and making other aspects of the job easier rather than thinking right if we take on Tony we'll make another 30k per year from him and that kind of line of thinking. I dont think it would really work like that although we could improve our throughput by me having more time to buy stock.

I've put in some enquiries about bigger premises today but the agents never seem to come back to you! We also have another slight issue in that a lot of places wont allow auto trade even though we are at the smart end.

Its really becoming a bit of a strain trying to decide what to do!

Are you based in Cardiff and called Wayne??

[fridaypassion]

No and No why?

[bearman68]

Coz it sounds just like the business that a friend called Wayne has in Cardiff. and he's got a bloke named Tony working there too.
He works in 'high end' automotive stuff, is pushed for space, and has more work than he can cope with - all sounded a bit familiar. (Incorrectly familiar as it turns out)

[Storer]

I think in the car repair/restoration business (I believe you are in) the only way forward is to take on someone with more knowledge/experience than yourself.
He needs to be able to work on his own and his experience should make him cost effective.

In a one-man-band situation you do not have the time to train someone.

It would be worth investigation the maximum size of unit you and use before paying rates in your area.

Also worth remembering that if you become ill for a period then it will have a detrimental effect on the business (even if you have insurance). A decent employee will help to cover in this situation.

The big issue is finding the decent employee.

After saying all of the above I should mention that I wouldn't employ someone other than in a self employed basis. But my business is not expansion limited by labour.

[truck71]

I would conduct a candid SWOT analysis of your business and make sure you include yourself in it; I'd encourage getting some 360 feedback as part of this. This should help give you some clarity and identify your own skills/wants/weak points. It could be that by expanding and employing someone who has more skills than you in key areas delivers additional benefit to your business. On the other hand it might confirm what others have said and you end up getting diverted from the areas you enjoy and become a GM.

We're all different, some are specialists, some generalists, some in between. I know things aren't as simple as I've described but it's a start.

[Birkin1932]

Just keep growing. no pain no gain as they say.

Your competition will be in the same boat.

lots of scare story's on here

[rog007]

Tons of great insights here.

You find yourself in a space occupied by thousands of others. It's a privelaged space so don't forget that!

So, what to do? Minimum of 3 options as usual:

1. Do nothing and just keep on doing what you're doing.

2. Expand to cope with demand.

3. Try to regulate demand so that you can retain your current shape.

From the little shared, I sense options 1 and 2 are not your favoured.

Then why not at least try option 3, maybe for a fixed period before reassessing the situation. And the secret to regulating demand; increase prices until the level of demand drops t match your capacity. Simples!

Good luck!

[fridaypassion]

Well we have a bit of progress I'm off to view a couple of bigger units tomorrow. We actually have just under 900 sqft here when I looked at the particulars again and we are looking tomorrow at two 1500 sqft units. These will still be manageable with me on my own but at the same time they will allow us to grow into them a bit by adding mezzanine space. Did some number crunching with rates etc one unit is another £300 per month the other one is actually about what we pay now but not in as good an area.

The option of having another small unit I worked out is a bit pointless as the cost will end up the same as just moving to a bigger place. Last hurdle to overcome will be if they will accept motor trade. We have been turned down for the same estate before so we will see.

[Storer]

Word of warning on the mezzanine. The rating office will increase the rates if you have a mezzanine, as it is added to the square footage. If the building is under the threshold without the extra footage but over with it, it may prove very expensive storage.

Good luck.