Has your small business grown to the point where you feel it’s time to expand? Whether you are looking to add new products or services to your offerings, open an additional location or relocate your existing location to a larger facility, successful business expansion requires proper planning. If you’re considering taking your business to the next level by expanding, Here are some factors you should consider before jumping in with both feet.

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Impact on Existing Business

This is one of the first things to consider. You don’t want a business expansion to have a negative effect on your existing business. You need to ask yourself – Will new products or services complement or diminish existing offerings? New offerings need to increase revenue, not just sustain it. If you’re considering a new or additional location, will you be reaching a wider audience or just replacing your existing customer base with a new one? Your existing business has to remain strong and support new locations or offerings until they become established and begin to turn a profit. If the expansion will diminish your existing business, it may be best to put it on hold and rethink your growth strategy.

Also, if your plans for business expansion include an additional location, it will need your undivided attention to get it up and running. Can your current location continue to operate properly and generate a profit in your absence? You need to be sure that you have an experienced and responsible staff and the most efficient procedures in place before you can devote your attention to an additional location.

Complementary Expansion

If your business expansion involves a new location, it is important to choose the right location. When you chose your existing location, you probably put a lot of time and research into making sure it was the best spot to open your business. You need to do the same with your new location, as you will be marketing to a new audience and be up against new competition. There is no magic equation to figure out how much distance should be between the two locations. Just make sure they are far enough apart that they won’t be sharing the same customer base. Otherwise, you will be increasing your overhead without increasing your profits. A new location should complement the existing one, not take business away from it.

Capitalize on Existing Systems

You probably went through a lot of trial and error refining the systems you have in place at your existing location. Don’t try to reinvent the wheel when expanding to a new location. Implementing those existing systems at your new location will help you achieve stability and success much faster than you did at your existing location. Your new location will benefit from all the time and effort you put into developing your current system and using the same systems in both locations will streamline operations.

Sufficient Working Capital

While the funds for expansion typically come from the existing business, be careful not to short change your current location or offerings. Pulling too much capital from your existing business could weaken it and leave it vulnerable. It is typically recommended to either build up enough excess working capital to fund business expansion or seek outside funding, either from traditional financial institutions, investors or alternative funding providers.

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Funding Business Expansion

If you’ve done your research and you’re ready to move forward with business expansion, don’t let a lack of funding hold you back. Capflow Funding Group provides invoice factoring and merchant cash advances to boost your cash flow and kick start your expansion.  CapFlow Funding Group is dedicated to providing the short-term working capital you need to keep your business growing. We will work with you to find the best funding solution for your business. While CapFlow Funding Group specializes in factoring and MCAs, we can also connect our clients with other alternative financing options that may be better suited to their business needs. We service many different industries with a variety of funding needs. Contact us today and find out how invoice factoring can help grow your small business.

Today’s small business owner faces numerous challenges every day but the most concerning are financial challenges. Managing business finances and promoting business growth is a complex task. Maintaining a solid financial situation is key to keeping a business operating and poised for growth. Frequent financial difficulties or working capital shortfalls can cause any business, even a well-established company, to fail. To prevent financial challenges from getting the best of you and your business, here are some common financial challenges and suggestions on how to deal with them. 

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Insufficient Cash Flow

Cash flow is the amount of revenue your business generates over a specific period of time. Maintaining consistent cash flow is a constant struggle for many small business owners. Regardless of how many assets a business has, without sufficient cash flow, a business is doomed for failure. In addition to having sufficient cash flow to handle recurring expenses such as lease payments and payroll, a small business needs enough revenue to cover supply purchases, business taxes, equipment maintenance and more. 

One method for improving cash flow is adjusting your payment processes. You can start by paying bills closer to the due date rather than early. While it may seem like a good idea to pay each bill as soon as it comes in, this could significantly reduce your cash flow. By waiting to make your payments while receiving payment from your customers, it will help to stabilize your cash flow. It can also be helpful to shorten your customer’s payment window. If you normally allow 60 days for payment, change it to 45 or 30 days. 

You may want to consider streamlining the payment process for your customers as well. Accepting major credit cards and offering an online payment portal provides customers with a quick and easy way to pay. Sending out payment reminders can also encourage your customers to make more timely payments.

Lack of Working Capital

Sufficient working capital is neck and neck with cash flow when it comes to financial challenges. As opposed to cash flow, working capital is the difference between the current assets and current liabilities of a business. While cash flow is used to cover all of your basic business expenses, capital is what is used to finance business growth. In addition to stabilizing your cash flow, budget and funding play an important part in maintaining working capital. 

Sticking to a Budget

Creating and sticking to a budget is crucial to accumulating working capital and growing your business. Start by totaling all of your sources of income so you know what you have to work with. Next, add up all of your recurring fixed expenses like facility and equipment lease expenses, payroll and loan payments. Then make a list of fluctuating expenses such as marketing, travel, and business supplies and included additional funds for unforeseen expenses and emergencies. 

Both your fixed and fluctuating expenses must be covered by your total income. Once you’ve determined a budget for each type of expense, any remaining income can be used toward business growth. The key here is to be realistic when creating your budget, reviewing it monthly to see if you’re on track and making adjustments if you’re not.

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Securing Small Business Funding

Once the budget is put in place, it’s not uncommon for a small business to have minimal working capital left over to invest in growth and obtaining funding can be difficult. Although approval rates have been increasing slowly since the recession, currently, only one in four applications for traditional business loans are approved. One of the biggest contributing factors is business credit. 

Not understanding how to interpret credit scores or what to do to improve and maintain them can stand in the way of receiving small business funding. To start with, you should have a business credit card for everyday expenses and pay that and all other bills on time. Work with suppliers that report to credit bureaus whenever possible and follow the same basic guidelines as with personal credit. Keep in mind, your personal credit can impact your business credit. If you have less-than-perfect credit, you may want to consider alternative financing options.

Fuel Business Growth with CapFlow 

To take the conventional route for obtaining small business funding you must be very careful to maintain a high credit score and have time to wait. Business owners often rely on quick and painless access to small business funding to help them keep their doors open and promote business growth.

If you’re a business owner with less than perfect credit, Capflow Funding Group may be able to help your business find the best funding solutions available to provide you with the working capital you need. We work with business owners across various industries to help them keep their businesses on track. Our team will work tirelessly to see you through to success. Contact us today to find out more about invoice factoring and our other funding options, and how they can help your small business.