3 Steps to Plan for Successfully Expanding Your Business

Expansion is an exciting prospect in the life of any business. Normally, it denotes that your business is doing well and will benefit from growing bigger. It’s also a challenging prospect, in that it can interrupt your normal operations and require additional resources, such as a business loan. Expansions are risky, and there are always obstacles in the way. What do you have to do to maximize the chances of success?

We’ll cover three steps to plan for a successful expansion: know your numbers, prepare a plan, and secure financing. While these steps don’t ensure success, failure to take them is likely to cost your business money, limit growth potential and even risk its survival.

Know Your Numbers

Before plans are even started, make sure these changes will really boost your business growth.  Determine whether your business needs the expansion based upon your cash flow: sales volume, your costs, and the difference between the two (your margins).

You might find that you’re not really growing and therefore expansion is not a good idea. If you find yourself in this position, work on removing obstacles to your growth before moving forward. These obstacles could include:

  • Not meeting your sales targets: Do you have the right marketing strategy and sales team? Do you offer the right product or service mix?
  • Not containing costs: Do you have a handle on your business expenses and keep them under control? Are you racking up bad debts due to poor collections?
  • Spread too thin: Are you working 100 hours a week and making bad decisions because you’re not getting enough sleep?
  • Not exploiting opportunities: Could you grow your sales and profits by buying more inventory, adding personnel/equipment or expanding your operations?
  • Not managing your cash properly: Do you sometimes run low on cash and have to postpone disbursements or purchases? Is your working capital too puny to optimize your revenues?

Prepare a Plan

You will never be able to anticipate 100 percent of what you’ll need for growth and expansion, but creating a complete business plan can reduce your unknowns. The plan should specify:

  • A roadmap to execute the expansion, including acquisition of new equipment, fixtures and other assets
  • Estimated one-time costs and new fixed costs, including financing costs
  • Anticipated changes to sales and margins
  • Amount of downtime expected
  • Timeline and strategy for recruiting additional staff
  • Anticipation of things that could go wrong and how much will be held in reserves

Make sure your business plan is detailed, complete, and written down.

Secure Financing

Once you know your numbers and have a plan, you are ready to seek financing. Most small businesses are not able to finance the expansion of their location out of pocket without stretching their funds too thin and need a loan.  You might turn to a bank, but banks reject many loan applications simply because of credit scores, and the slow, tedious application process involves a lot of paperwork.

To save yourself a lot of time and hassle, you might consider a trusted alternative commercial lender. There are a variety of options online that can do microloans, cash advances, or small business loans targeted for specific purposes like equipment leasing or working capital loans. Alternative lenders may be able to weigh other factors beyond credit score, like the overall health of your business, and provide quick turnarounds, some even as little as 24 hours.

 

If you decide to go with an alternative lender, make sure to research and vet them thoroughly, and educate yourself about their rates and their repayment terms. The last thing you want to happen is to disrupt your cash flow.

If you follow these steps, you will be well on your way to planning for a successful expansion! You can contact IOU Financial if you have questions about these steps and how to make financing your expansion a reality.

Customer Success Story: Getting Ahead of the Competition

Twin brothers Jermaine and Damian launched No Grease, Inc. in 1997. Growing up with a mother who was a stylist, they were introduced to the hair industry at a young age. Now, with 19 years of experience under their belt, they have five Charlotte, NC locations.NoGrease

NO Grease, Inc. is no ordinary barber shop. The brothers have put their entrepreneurial skills to work and created an atmosphere of excellence, which they hope to continue with the help of an IOU Financial small business loan. “We sought out additional funding from IOU because wanted to do more advertising, update our equipment, and keep ourselves ahead of our competition,” Jermaine explained. “It’s important to strive for more visibility among our customer base.”

“IOU simplified the process of building a relationship with a financial institution,” Jermaine said of his experience. “[IOU] took out the small print, and put the meat and potatoes in front of us: this is what we are borrowing, this is what we pay every day, and this is what our total repayment is. Simplicity is the ultimate form of sophistication, and IOU supplies that.”

“Communication is a big thing in small business, and IOU communicates well. If someone is considering a small business loan, make contact and start the dialogue,” said Jermaine. “If you’re looking to grow in your industry, reach out and see if IOU can help provide you with the funds you need to grow.”

 

If you’re in the Charlotte area, book an appointment with No Grease, Inc. here: http://nogrease.com/

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