You’ve got a business and it’s doing well. You might even have some employees and quite a lot of opportunities on the horizon. You’ve perhaps outgrown your premises or can’t keep up with the workload that your range of clients presents.
This happens to a lot of businesses that don’t have as many restrictions on who their customer or client base can be. The only real restriction is your output capability. So, how do you know if it’s the right time to expand your business?
One aspect of expanding your business that you might struggle with, is being able to afford the initial expansion. If you need bigger premises or to hire more staff in order to gain new business, then you’ll have to pay them before the payment will come in from the new opportunity. Cash flow issues are a major roadblock to business expansion. But there are ways around this.
Some businesses are able to expand if they change their payment terms. You could hire freelancers initially – who are paid after the fact – instead of full-time employees. But you could then offer a promise of promotion after a probationary period, so you would be able to afford to take on the new client and pay your freelancer once you have been paid.
Start-ups may also consider paying employees in shares so they can then expand. Some production businesses – film and theatre – will offer payment in shares of the final profits of the piece. So, it will be created for next-to-nothing and then may make money once it has been screened or sold. Paying this way enables the business to create the product that needs to be made without having any guarantees.
Alternatively, if you need more space, there are options to stagger payments so that you can pay for your premises once you have received payment yourself. Commercial mortgages can help with the costs of expanding a business by allowing you the money upfront that will then be paid off in repayments. This could help if you feel confident that you’d be able to take on a greater workload if you had the premises to do so.
When considering expanding your business, you need to be confident that you will benefit from it. Some businesses expand too quickly – such as those fuelled by trends – and find that they are soon losing business. The restaurant industry is known for over-expanding and then having to close premises at a later date. The costs of expanding and setting up doesn’t match up to the money that comes in once the business has opened.
Businesses are built on growth. Each year, growth needs to occur or else your business could stagnate. There is no right time to expand, but there are many wrong ones. It varies from business to business and depends on their clients, customers, and industry. But, it’s ultimately a decision that the business owner should make based on weighing up the opportunities of expanding with the pitfalls that then may occur.