Business expansion is an exciting endeavor for any small business owner. Taking this step means that you have successfully sold your product or service, and it has been well received by the public. You now know that scaling your small business up could bring in some real profits. However, many small businesses fail after their first or second year because of their lack of planning.
Before you try to secure financing, take some time to reflect honestly on whether you will be able to maintain sufficient funding, execute the right marketing campaign, and hire the right employees. Without planning for these three factors, you could find that your attempt at business expansion creates a drain on your limited resources.
Sufficient Funds
It takes money to make money, and your expansion project will need funds to ensure your business continues to grow while maintaining normal operations. Calculate how much capital you would need to ensure your added revenue from expansion will make up for the costs associated with the project. Crunching the numbers will help you avoid either taking on too much debt or finding yourself short on funds. For information about the right questions to ask about your business’s cash flow and how to start securing financing, check out “3 Steps to Plan for Successfully Expanding Your Business.”
The Right Marketing Campaign
While you may have had success with word-of-mouth referrals or small online campaigns to generate initial profit for your company, you will need to inform customers of the changes you are making to drive more traffic for your business. A targeted marketing campaign can help grow demand for your products or services, and even a small budget can make a big impact. Don’t know where to start? Check out our recommendations for getting the most out of your small marketing budget. If you don’t have the time or expertise to coordinate a campaign yourself, consider hiring a marketing professional or a PR firm to create and spearhead this marketing campaign for you. If you opt for this route, make sure to budget for these costs when you lay out your business expansion plan.
Experienced Employees
While you may have started your small business out of your garage with one great idea, make sure you plan ahead for hiring. Spend some time reflecting on your own strengths and weaknesses so you know when to ask for help. Depending on your area of expertise, there may come a time when you will need to hire managers to run certain aspects of your business so you can focus on new product development or customer acquisition.
Skilled and hard-working employees can often mean the difference between success or failure because you have to delegate tasks as you grow. Take interviews seriously and hire individuals who show high levels of drive to help your business succeed. Don’t overlook the dollars and cents of hiring as well. Taking time to estimate and plan for the costs for hiring staff can be just as important as getting the right employees in the door.
Taking on a business expansion project needs to produce a significant revenue boost to ensure the time, money, and energy are all well worth it. With some planning ahead and estimating the costs of things like hiring and marketing, you can set yourself up for success.
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