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Growing and expanding your business can be driven by a number of things, but whatever the reasons, it is important to step back and take a measured approach to any expansion decision.
Growth can generate a whole new set of challenges (as well as opportunities).
Central to expansion is keeping an eye on cashflow and how it will work. Larger businesses need more capital so it is vital a complete analysis of cashflow is conducted.
To help with the decision, you may also want to undertake an environmental analysis of your business. To prepare for any change in business, understanding your internal strengths and weaknesses, and your external opportunities and threats (SWOT) is important. It is imperative to evaluate clearly and not just react.
If you do not have a strategic plan, this is now the time to incorporate one into this next phase.
If you conclude that expanding is the way to go, you should then consider the following:
- Examine your long term ownership goals. Start with the end in mind and determine your exit/succession strategy. This will help to focus your planning.
- Review your ownership structures and whether these are the best for your future business model.
- Model how the expansion will come from internal growth, acquiring new technology, acquiring a new facility, expanding your markets, or by acquiring an existing business.
- Consider what key elements of your business will need to change; growth may mean new systems and processes are required for IT, HR, CRM etc.
- Prepare a business plan and analyse what you need to accomplish growth.
- Plan, if you have a strategic plan in place, review it, and see how an expansion fits into the original plan. If you do not have a strategic plan, this is now the time to incorporate one into this next phase.
- Project and prepare a financial projection to test the feasibility of the expansion from a cashflow standpoint and to analyse the amount of time it will take you to recoup the investment or how fast you want to be paying back debt.
- Utilise, by looking for efficiencies you can take advantage of utilising the existing infrastructure and factor those into the financial projection model.
- Ensure that you, as the business owner, have the ability to create the time to prepare for expansion carefully. Also being able to lead your staff through the process may require extra time and effort from you.
- Set up an advisory board with outside expertise to bring together a team of professionals to assist you in your growth.
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Disclaimer
The information provided in this article does not constitute advice. The information is of a general nature only and does not take into account your individual financial situation. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you contact Brentnalls SA before making any decision to discuss your particular requirements or circumstances.
