One of the greatest joys of a small business owner is to see his or her undertaking grow and flourish. You recall putting in your hard-earned money into an endeavor where success hangs in the balance. But as it gains headway and profits start coming in, your natural tendency is to immediately expand the business.
However, early success is not always a sign your business is ripe for expansion. It is not even advisable to think expansion unless you know the needful things of a growing small business. The question is whether your business is ready to take the next big step.
5 preconditions to small business expansion
There are preconditions to expansion and you can determine your business’ preparedness based on the following:
1. Are you meeting your sales and revenue targets?
It is presumed that you have set business goals at the beginning of each year. Also, you are regularly monitoring how much better or worse the business is versus sales and revenue targets.
If you’ve been consistently meeting, if not exceeding business goals, then you could envision expansion. But at this point, everything is exploratory and nothing is definite.
2. Are you having cash flow problems?
Every small business has its peak and lean months which is normal. However, it is vital to exhaustively evaluate if your cash flow is steady and sufficient. It means your payables are addressed without delay and receivables come in promptly.
Minor cash flow problems may be encountered from time to time but having perennial cash flow problems will not justify any move to expand. Healthy cash flows and the level of internally generated funds are major determinants of expansion readiness.
3. Are you making a growth plan?
Let us assume that you have passed the first two prerequisites. Your business is consistently hitting business goals and you see no major cash flow problems. At this stage, expansion becomes a feasible option. Still, it is not wise to rush unless you have a growth plan in place.
Meticulous planning is required for crafting an expansion plan. There are factors to consider such as the level of growth your current business can accommodate. Further, will the new products or services you plan to introduce deliver the same or more profits like the current ones? All these factors among others should be taken into account.
4. Are your competitors in expansion mode?
If you believe expansion is the solution to be ahead or at par with the , then set your growth plan in motion. That is of course based on the assumption that you’ve met the preconditions above.
5. Are you financially fortified?
Obtaining financial support is inevitable when you embark on an expansion. cash flows are not enough to accelerate growth. Even wealthy corporations source external funds to achieve business objectives.
Thus, in this context, a growing small business can realize business growth with the help of funding partners. When your business seeks financial support, it doesn’t mean you’re financially distressed. You want to boost your business and ensure long-term sustainability.
There is a group dedicated to extending financial support to small business with plenty of room to grow. The good thing is that the facilities being offered are hassle-free and non-secured.
Expansion is always the dream vision of a growing small business. Keep in mind that the growth and success of any business do not come by chance. It is premeditated and well-thought out.