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Is your small business experiencing growing pains? Does this mean you need to expand your small business? Read on to gain some clarity about that.
As an entrepreneur, you want your enterprise to grow and become successful. However, this doesn’t happen by itself.
Business growth requires a meticulous plan. However, even thinking about the growth process can be exciting. Expanding your business will mean more products, more sales, more customers, and more revenue. It might also lead to a more significant or even a new enterprise.
However, don’t be in a hurry to expand your business. Make sure the enterprise is ready for growth.
Next, the question will be, where will you get the money to finance this growth?
Having enough financing is vital to your success. So be able to identify issues that call for additional funding. Then take appropriate action.
For example, if you notice any of the signs we list below, consider a reputable lender such as Thinking Capital for a business loan.
1. You've Outgrown the Space
You and your employees need enough space to conduct your business. So if your workers are scrunched desk to desk, it might be time to expand.
If this is how your business looks today, considering buying and building a second location. On the other hand, also assess other options such as buying or leasing an existing property.
Moreover, once you decide to expand, it's important to pace yourself. Try to plan carefully and anticipate your business's growing demands in the future. Then act accordingly.
What's more, moving your business will be disruptive to your employees as well as your customers. So don't settle for a space that's not just right. You don’t want to acquire a space that’s either too big or too small.
2. You Need to Expand Your Workforce
If your business is growing, you likely need more employees.
However, this is not an easy area to expand in. So don’t be in a rush to hire a new employee. Instead, calculate the total costs of hiring that employee, including salary, paid leave, healthcare, and time off. Do you have the money to expand your business in this way?
Further, you need to
ascertain the cost of training new employees. How many workers can you afford
to hire? Will they deliver new revenue streams to your firm?
Hiring additional employees is a vital recipe for growth. But it’s even better when you get competent employees who deliver value to your firm.
RELATED ARTICLE: BEST PRACTICES FOR HIRING NEW EMPLOYEES
3. You Need More Equipment and Older Equipment Is Wearing Out
Are you in need of new or extra equipment? Or is your older equipment wearing out? This is a clear sign you’re ready to expand with a capital injection.
For instance, if you’re in the restaurant industry, a mixer and an oven keep your operations running. If the equipment starts failing, you won't be able to meet customer demands. At this point, it makes sense to upgrade your machines.
However, it’s quite expensive for a small firm to upgrade their equipment. In many cases, you might not have the finances to support such an upgrade. The only alternative is credit financing. This will help you cover the costs without affecting your cash flow.
4. There Are Ebbs and Flows in Demand Patterns
As an enterprise, it's smart to keep a cushion of cash on hand for an emergency. If possible, it should be enough to cater to two months of operating expenses.
However, most small businesses don’t have this amount of cash at their disposal. It’s even worse when it comes to seasonal activities. Here, the highs and lows of your cash flow might harm your business performance.
For instance, you might notice that demand for your service or product expands during the summer holidays. The only way to respond to this situation is by buying more inventory, which will increase your sales graph.
5. Your Business Needs More Inventory
Do you want your business to grow? Then invest a substantial amount of capital toward inventory management.
Remember, expanding your
business entails more than opening new locations or hiring new talent. It may
also include offering new products to your customers. This will keep their
interest, build brand loyalty, and attract new clients.
For a business to grow and expand, you must buy additional inventory. For instance, if you’re running a salon business, observe the trends in the industry. If you notice any new trends, buy the latest tools to serve customers who are coming in for that trend.
Avoid Cash-Flow Pressures as You Expand Your Small Business
It’s every entrepreneur’s
dream to expand their small business. However, this isn’t possible without a
substantial investment. At times, you need to grow your startup faster than you
can afford. That’s where credit lines come to play. They will help you expand
and grow your business.
As an entrepreneur, you need to know when your business needs capital to finance its growth and expansion. Armed with this knowledge, you’ll be able to avoid short-term cash pressures.
To find more articles about running and expanding your business, visit our blog frequently.