Expanding a Small Business: What to Know Before Hand
Business is booming, and you set your eyes on expanding. With your business plan mapped out, you consider upgrading your network servers to add newer SFP modules; you decide to add new products to your distribution line; and you even consider hiring more workers to handle the workload. However, the expansion is starting to worry you, and you’re beginning to have some doubts and fears. Before you get too stressed out, here are some pointers to help ease your mind, and to help you understand if expanding is right for you.
Finance the Expansion
Before you even decide to expand, you must understand how you will finance your company’s growth. You must be certain there is a demand for expansion in your bottom line. By understanding these numbers, you’ll see how this money will go into paying for the additional inventory, facility and workers. If you decide on using a loan or equity to pay for the expansion, be sure the products, equipment or facilities will help you earn enough profits to repay the borrowed money. Remember, if you’re a small business, you never want to expand too aggressively as you might end up with more debit than you can repay. Take it slow, there’s no need to rush a great product or service.
Does the Expansion Benefit the Operation?
You never want to expand your business if the costs of operation outweigh the expansion efforts. You expand for two reasons: one, because as you expand the cost per unit falls drastically lowering the cost of production and increasing profits, and two, because you can sell your products at a higher cost per unit. If your company can benefit from either of these two mentioned ideas, go ahead with the expansion. If not, be wary. In order to increase profits during an expansion, you typically will buy from more than one store, buying items in bulk at a cheaper cost. By buying in bulk, you also have additional resources to provide better value for customers.
Never be afraid to open up a new store in uncharted territories, whether it be a brick-and-mortar store or an online store. Confidence removes the fear of having to worry and stress over minor details. You never want to lose sight of the big idea: making more money in a new market. If you start to panic, stress and even lose confidence, you may not be prepared for the smaller issues that will arise when expanding. Always be confidant that the acquisition of new optical transceivers will boost the performance of a network, even though the costs for the devices may seem high. Remember, confidence is key in helping expand a successful company.
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