Dear Holly,
I own a yoga studio here in Brooklyn. We’ve been open for just under two years now, and we’ve been profitable for about a year. Business continues to grow steadily, and I’m starting to think about what my next move should be. I’m just having a hard time understanding when is the right time to grow. I’m feeling very excited and enthusiastic about taking the next step, but I want to act responsibly.
Can you give me any advice on how to make that decision? I’d hate to dive into my next project at the wrong time and sabotage everything I’ve worked so hard to build.
Thank you,
Downward Dog on an Upward Trajectory
Dear Upward,
I’m super excited to hear about the success you’ve had so far with your studio. And I’m impressed that you’re taking the time to consider what the best timeline is before you leap. So often I see people get excited that they’ve had some success and dive into the second venture prematurely. That perfunctory move typically produces a second business that lacks a well thought-out plan and ends up draining the first business. Unfortunately, sometimes it causes the whole empire to crash. My point being: taking a moment of pause could mean the difference between building your dream and having it all come crumbling down.
The first step I urge you to take is to look at your current studio and ask yourself if you have maxed out what you have. Are you doing everything you can to generate the most business in that space with the best operating margins? Even though you are profitable, could you be doing better in your current space? The reason I ask is that you don’t want to shift your focus and energy on a second space without first being absolutely positive that the initial space is running at max capacity. Take time now to look at your numbers and the overall health of your business. Here are some questions to ask yourself: Is the schedule you’re offering at max capacity? Do the majority of your classes fill to max capacity? Are your staffing numbers and operating costs creating a healthy profit margin or can you tighten up the ship? Remember that once number two is in process, you’ll have to be able to divide your time. It’s not time to grow until you’re completely clear that your present studio is doing its best, or you at least have a plan to optimize your present operation.
Second, make a plan! While you’re reviewing the first studio, make sure to understand what made you successful there in the first place. Was it the neighborhood, the price point, your teacher roster, your marketing plan, or just “luck”? We often think that if we’ve built a successful business once, we can just do it again. That is true, but you don’t want to just dive in to number two without really understanding how that success was generated. I see far too many business owners neglect to admit that they were lucky the first time around—maybe because they got a good write-up about them, a space with incredibly cheap rent, a celebrity happened to unofficially endorse them and bring loads of business to them—and then fail to really plan the second time around. Needless to say, it never works out in the long-term. Know what contributed to your success in the first venture and question if those same opportunities are realistic and available in the second venture. You’re ready to grow when you’ve assessed the first business and made a clear plan for the second one.
Third, I would ask you to look at your financial situation and get clear on what resources you have available to you to grow. Do you have money ready to go or do you need to build your resource pool? And how long will that take? Often times we underestimate exactly how long it will take us to raise money, especially when we are seeking investors. You may want to grow this year, but the financial reality may indicate that you’ll need to spend at least a year raising the money. Your financial resources will certainly dictate when you will be ready to grow.
Finally, look at your team. Have you identified who the key players are that you will need to help make this happen? Are they already part of your team or will you need to hire them? If they’re already part of your team, you want to make sure that they’re clear about the direction you’re heading and on board with your idea and timeline. Remember that opening a second business will certainly be a team effort, and it’s never too early to get everyone on the same page. While you’re in the planning process, be sure to identify who you’ll need early on and get the right people in the right places from the beginning. Adding a second business always means releasing more control to others to help you build your vision. Don’t take the leap until you’ve assembled the right leadership team.
If you follow these four steps, you’ll be able to identify the right time for growth. Like I said in the beginning, the most important thing you can do is take pause and reflect on your success before moving forward. Good luck!
Want valuable insights into how to grow your business? Email Holly to set up a time to talk at hhoward@askhollyhow.com or to ask a question for the next Ask Holly How. Register for her next business development program here.
