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.
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.
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.
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.