Tips on how to expand your business (Part 1)
Congratulations, you have successfully started your own business and you are now thinking of expanding but how can you avoid the pitfalls and what do you need to watch out for?
Growing too quickly: Growth is good and the need to move quickly before your competition does is the key to success. But expanding too early and too quickly is probably one of the main reasons companies go out of business. They commence an expansion programme without adequately thinking through the consequences of the increased overhead, extra staff required, additional manufacturing facility or premises, warehousing and the amount of investment needed. So before you embark on any expansion or growth strategy, do the maths, get advice, set realistic goals and expand only when the business is ready and the market can sustain it.
Importance of business planning: A business plan should describe in detail how a business is going to achieve its goals, the market conditions, obstacles and challenges that it will face. It forces the business to consider the financial needs, marketing, sales and management plans, competition, and the overall strategy and objectives. Top businesses succeed because they have identifies a need, have a well thought out business plan and strategy. A great business plan should be a like a roadmap moving a business from one point to another with regular ‘reality check in points’ along the journey.
Overspending and over predicting: Many businesses burn through their seed capital before their cash flow is positive. This often happens because of misconceptions about how the business will perform particularly around sales or lack of. If you’re just starting out, seek out professional help from individuals or coach’s with expertise of your market who will help guide you to through the challenges ahead.
The right location: How many times have you heard the expression: Location, Location, Location. Don’t let low rent or a cheap lease tempt you into choosing the first location you come across. If you are a restaurant or shop you need strong footfall. Look at the competition around you (how many similar businesses are located nearby?) and look at accessibility – is the area well served by: public transportation, with local offices, homes and convenient car parking for customers? Each business will have a different criteria to be met. Part of your Business Plan will need to address the question of location and why it will work for your business.
Keep an eye on your competition: Customer loyalty doesn’t just happen — you have to earn it. Watch your competition carefully and stay one step ahead of them. Just because they slash their prices does not mean you have to – that leads to a race to the bottom where no one wins – work on your Point of Difference clearly defining the value you and only your company can deliver over and above your competition and communicate that through your marketing campaigns. Sometimes it is better to walk away from an order if it makes no sense and the profitability is not there.
Use 2017 as the year to expand your business but ensure you have the funding and cash flow procedures in place before you embark on any growth.
At Oxmantown Commercial we specialise in working with SME business owners and start-ups providing cash flow solutions particularly for expansion – why not give us a call today on +353 1 230 0866 or e mail info@oxmantowncommercial.ie
