When your business is humming along, it may be enticing to begin to plan your expansion. Expansion can mean adding to your space through construction or purchase or offering an additional sport or activity. There is much more to consider than simply whether your facility seems busy.
During conversation with seasoned owners – who have expanded by building onto their space and by adding activities – we learned some key questions that they believe will help those who may be facing something similar to make wise decisions about their future.
Before expanding you should ask yourself these questions:
- What exists?
What is your cost to ramp up business (whether retrofitting, purchasing existing business or starting from scratch)?
What is your break-even point? (how many students must you have and what is their average payment vs. cost of doing business)
- What are your assets?
Do you own your building or the land you’re building on?
Are you leasing and releasing? (Tip: Don’t expand into a larger lease.)
- Have you maximized your existing space?
Could you offer other activities during your downtimes?
Could you alter existing space to be more heavily utilized?
Can your marketplace support your expansion?
- Are there too many choices for parents? (not just gymnastics or other sports but ANY children’s activity)
Is the community growing or have the children in it aged out? (public school trends are good indicators)
Is the community changing to include less residential and more commercial entities?
Is the average household income dropping or keeping pace with the average?
- Are you at the right point in your career for expanding?
Are you far closer to retirement than graduation?(How many more years do you want to do this?)
Do you have other commitments that require most of your focus?
Is it something you’re passionate about?
- Is your insurance willing to cover your expansion? (new sport or building)
If you get declined for your new sport, make sure that it isn’t something simple that is triggering the non-coverage (like wording in curriculum…)
- How will the expansion impact liability?
Do not assume anything. Research and confirm everything.
Does the facility you’re purchasing have showers? After the USAG incidents/accusations/findings anything even vaguely related to impropriety should be approached with eyes open or avoided.
- Do you know your demographics?
Will your area support a larger facility or another sports offering?
Have you looked at the area’s school metrics to see if your target age group is expanding or contracting?
After delving into these 8 questions, it’s easy to see that the decision to expand is a complex one and not one that should be rushed or taken lightly.
Serious research, discussions with other owners and soul searching can guide you to a successful future – with or without an expansion.