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Your business is successful. It’s bringing in the profits, maybe giving you a nice lifestyle and providing you with future security.

But you’re reaching the point where you’re working at capacity. Maybe turning away orders for lack of staff, time, or equipment. Maybe shunning business meetings because you don’t have the right kind of facilities.

You need to expand. It would solve all those problems.

Before you leap in, take a step back and make sure you’ve looked at it from every angle. There are no cast iron guarantees no matter how much preparation you do, as you’re probably already aware, but some of these considerations will help you move forward with more confidence.

What Are Your Aims?

This may sound obvious, because shortfalls or limitations within your existing business setup will have prompted the idea for expansion in the first place.

However, articulating your aims helps you minimise risks and make smart decisions.

There are lots of reasons why business owners choose to expand. Drilling down into some of these reasons can help clarify your aims and objectives:

  • Extending your customer reach or boosting brand awareness. A larger operation tends to have more weight in the business and public eye than a one-man-band, so maybe your main reasons include improving your community standing, either B2B or B2C.
  • Increasing your product or service range. Do you need more studio space, more manufacturing equipment or more staff? Sometimes you can find you’re in a catch 22 situation, needing more space to fulfil more orders, but unable to chase the sales because you don’t have the space.
  • Having office space that better suits your needs. Renting traditional business premises can drain your finances but look around and you’ll find alternatives. One such is the flexi office that gives you all the services you expect but without the long contract or complicated finances with hidden extras like VAT or business rates. Monthly contracts minimise your risk and commitment level, with a bonus of nearby self storage if you need it for stock or equipment.

Do You Have Sufficient Initial Funds

Do a thorough costing before you make a final decision, making sure you’ve included everything you can think of. It might help to take professional advice, so you leave nothing to chance.

Once you’ve done all your financial homework and added up the costs involved, add on some extra to cover random expenses you weren’t expecting.

Have You Factored in Ongoing Higher Costs?

When you’re paying more for larger premises, an increased staff, more storage for products or space for additional machinery, your monthly outgoings will naturally jump.

In the early days of expansion, income might not keep up since you’ll also need to increase your marketing and sales efforts to enlarge your customer base.

So, as well as making sure you can fund the initial expansion phase, you must also ensure there’s a reserve to get the business safely through the first vulnerable months while your income or profits catch up.

Will You Need to Borrow Money?

Even if you think you can fund the expansion without borrowing, it doesn’t hurt to have your bank manager onboard and aware of your future business plans. Speaking to your accountant can also provide good financial advice, maybe giving you additional ideas or avenues to investigate that you hadn’t previously considered.

Making sure your books are up to date, being confident in discussing the finances, and maybe writing a fresh business plan can all help to clarify your thoughts and influence your decisions as well as impressing your bank manager.

Are You Ready for the Commitment?

While business expansion, with all its perceived lucrative potential, is exciting, it brings with it a lot more work and responsibility.

As well as the business itself being ready to expand, as the business owner you need to be personally ready. While you’re bound to have questions and uncertainties, if you find yourself seriously questioning what you’re doing, go back to the beginning and revisit your initial thoughts on your aims and objectives.

The wrong kind of expansion can prove more of a hindrance than a help. Perhaps what you actually need is slightly more space for your stock rather than a swish city centre office. In that case, investigate the cost of self storage, as this option can solve multiple space issues without vastly increasing your outgoings.

There are always options and many diverse expansion routes. When you’re in a business stalemate, or you feel the business is stagnant, it’s time to examine your options and take all the advice you can dig up (both industry and legal).

With plenty of personal soul-searching coupled with practical investigation, you can make sure the steps you take lead you along the right business path.

Chiino
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