Knowing how to successfully expand a small business is a skill that many business owners do not possess. According to statistics, most small businesses will fail within the first five years of operation. Though there are several contributing factors behind this statistic, the common thread among most of these failed ventures is that their owners did not know how to properly manage their small businesses as they began to grow.
For an expanding small business to be successful, it requires a great deal of attention, care, and knowhow as well as adequate financing. If you are the owner of a newly established or growing small business, then here are a few tips you should keep in mind:
1. Do your research before making any major decisions.
Put simply, the more informed you are, the better will be the decisions that you make. If you are looking to offer new products or services then first consider what the impact would be given current market conditions as well as your available resources. If you are planing on changing your location, then you should consider whether to buy or lease your property. You should also look into different commercial real estate companies and terms of lease.
2. Try to stay one-step ahead of your growth.
To save on time, money, and productivity, you should try to be prepared for any future changes your small business is likely to experience. If, for example, you are renovating your location, then build into your plans more space than what you currently need.
3. Watch your cash flow.
It is common among small businesses to struggle with tight cash flow. This is all the more true when a business starts to rapidly expand. As growth happens, it is easy to loose sight of your expenditures. Since a lot of money is being directed outside of the business for new equipment, new supplies, or higher payroll expenses, a cash shortfall is usually inevitable.
Make sure that you have several financing options in place. If traditional funding opportunities are limited, then consider alternative forms of financing, such as equipment leasing, invoice factoring, or business cash advances based on future credit card sales.
In short, as your small business begins to expand, the key to success lies in careful planing and preparation.