From adapting to suit your clients’ needs, to branching out into new markets, there are many reasons for growing your business. Here, we outline some areas to consider before deciding to expand.
Making an informed decision
Carrying out thorough research is crucial in helping you to make an informed decision. Conduct market research to establish the following: is there demand for your product? How big is your potential marketplace? Will you be able to hold your own against your competitors?
Only healthy firms should consider expanding. If your business is not profitable, expanding may only hinder you. Assessing your current business performance is key: doing so will help determine whether you have a solid base that can take the inevitable pressure and upheaval that comes hand-in-hand with expansion.
Business owners are advised to think about the cost implications of expansion. Choosing to expand often means businesses are obliged to take on additional members of staff, and require extra resources. It is important to determine whether the profits generated by the increased business would be able to sustain these additional costs.
Raising business finance
It is essential to identify a method of finance that works for you and your business. There are various funding options available to business owners seeking to expand.
Bank loans often prove to be the most popular source of funding for firms. These can be taken out for a fixed term, and business owners can agree interest rates in advance, which makes factoring in monthly repayments to your financial plan straightforward. However, keep in mind that every loan application you make will show up on your credit file. Before you apply, ensure that your business plan is watertight and that your reasons for borrowing are valid. We can carry out a financial assessment of your business before you seek to apply for a loan – simply get in touch with us for more information.
Alternatively, you may wish to make use of an overdraft. Overdrafts have a set amount of money, which is agreed between you and your bank. Limits are agreed in advance, and interest is typically charged on the money you receive from an overdraft facility. However, proceed with caution: an overdraft is not designed to be a long-term source of finance, and continued use may cause your bank to question your business’s profitability.
Some firms operating in specific sectors and working on specific projects may be offered a grant. These are typically provided by the government, local councils and charities, and are often non-repayable. Grants are highly sought-after, and competition for them is fierce.
Managing the expansion
Thorough planning is key to the effective management of a business expansion. It is impossible to plan for every eventuality, but the more detailed your plan is, the more likely your expansion will run without issue.
Our top tips for a smooth expansion include:
- Creating a sound marketing plan: as your business evolves, you will need to adapt your marketing plan. Ensure that your revised plan promotes your expanded business.
- Expanding slowly, preferably in stages: a staged expansion allows business owners to analyse the market in order to assess the demand for the increased business.
- Managing client expectations: inform your clients of your expansion if it risks adversely affecting them. It is important to highlight to your clients any changes and improvements you have made to the business.
- Setting achievable goals and deadlines: most importantly, set yourself realistic goals. Meeting these will provide you with a sense of achievement, and may help to boost enthusiasm amongst your employees.
For more information on growing your business, please contact us.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.