03/17/2014 11:04 am ET Updated Dec 06, 2017

3 Facts to Consider Before Expanding Your Startup Tech Company


Your first urge as an entrepreneur is usually to expand your business, but it's not always the best course of action.

Entrepreneurship is often pursued by people with great aspirations. Entrepreneurs are visionaries who aren't afraid to make logically risky moves in the hopes of achieving greatness in one form or another, which usually means they are eager to grow their business as fast as possible.

As a serial entrepreneur, I've been there before many times. That urge to rapidly expand your business to reach new demographics, meet new needs, and of course net new sales, is both reasonable and healthy. However, there's a flip side to expansion that many entrepreneurs neglect.

Consider these three truths before you run off trying to expand your business as fast as you can:

1. Growth Costs Money. It's nice to think about the new team you can hire or the new demographics you'd like to pursue, but have you translated those ideas to projected expenses? New hires cost money, as do new marketing campaigns and new developments for your business. Can your business handle the upfront investment?

2. Revenue and Profit Are Not Synonyms. If your business is not currently profitable, expanding may not be your best option. An unprofitable small business may only turn into an unprofitable large one. Focus on profitability first. Only once you are able to cross that threshold should you think about expanding for more revenue.

3. Your Role Will Change. You might currently love your position as a president of a small company. You get to interact with familiar people every day and enjoy the casual atmosphere of your office. But when you start opening new locations and managing dozens of new hires, you might lose that and be sucked into a less interesting role as a higher-level decision maker.

These facts aren't meant to deter you from trying to grow your business; they are merely items for you to consider. If you are excited for a change in responsibilities and are prepared to handle the financial impact of expansion, then go for it! Your business is probably ready.

Jose Vasquez is a serial entrepreneur and tech enthusiast dedicated to helping startup technology companies get the direction and momentum they need to succeed. As the founder of Build. Brand. Blast., Jose has established a collective resource for tech entrepreneurs to consult when brainstorming, creating, launching, or expanding a new business. Jose is also the founder and CEO of Quez Media Marketing, a marketing firm that combines technology and creativity to help new and growing companies get the results they need.

Jose graduated from Goldman Sachs' 10,000 Small Businesses program. Goldman Sachs is a partner of the What Is Working: Small Businesses section.

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