After pouring your heart, soul, and sweat into your business, it’s now become a flourishing venture. However, you also find yourself at a crossroads: with business picking up and prospects looking great, is it time to finally expand?
Indeed, expansion is the next big milestone for any business, one that offers many great (and lucrative) advantages—as well as challenges. Business experts have warned that over expansion is one of the leading causes of small business failures. So before you consider opening another branch or franchising your business, check to see if it’s truly ready.
You can’t make more money if you don’t invest more money. After all, expanding a business means increasing overhead costs such as rent, salaries, benefits, inventories, warehousing, and the like. Of course, you can’t just assume that you can afford all of these additional expenses—doing so can be disastrous to your business.
Are you sure that the market is ready for an expansion of your business? Your company might be flourishing in your locality because it may be the first or only one of its kind. But if you open a branch in another state, for example, you might suddenly find yourself as a small fish in a gigantic pond. In short, if you’re going to expand, make sure you’ll have enough customers to support it.
Product and Supply
If you determine that there is a clamoring for your products in the areas you want to expand to, be sure to check whether your supply chain can accommodate the increased volume of demand, and whether you can deliver the finished products there. If not, you’ll need to invest in expanding your supply and logistics network as well.
Preparations for Financing
Chances are, you’ll need to take out a loan to afford your dreams of business expansion. As such, you need to make sure that all your books and accounting documents are in order. Lending money to businesses is a huge risk, and your books are your proof of financial capacity.
Expanding your business is one of the most thrilling and daunting things an entrepreneur can face. However, you can have more confidence in taking on this challenge is you have a clear grasp of your business’ finances. An accountant can be of great help in this regard. They can look at your company’s current cash flow, debt ratio, and projected expansion costs to see if your bottom line can truly bear this growth spurt. Of course, work only with trusted and accountants to ensure the accuracy of such information.
What to Consider Before Your Business Expands, entrepreneur.com
10 Key Steps To Expanding Your Business Globally, forbes.com