How to prepare your business finances for expansion
The prospect of expansion is just one of many efforts for business owners to content with on the journey to success.
It is often an essential part of what makes a business sustainable. It can be highly-rewarding, yet it is extremely challenging without the right preparation.
This is partly down to the financial aspect of the process, as there can be so many details to consider, new employees to hire and directions to take.
These factors all cost money at some stage, so taking a long-term approach and developing a fool proof budget is crucial if the expansion process is to run as smoothly as possible.
Your new income
If you are worried about whether or not your expansion is financially viable, it is important to remember to account for the new predicted income of your business.
This may help inform your final decision when it comes to allocating funds. For example, if you were looking to hire new staff, but your projected income cannot cover their wages adequately, you might be able to direct this money to better use in the early stages of the expansion process.
If you stumble across an unmissable opportunity, such as securing the ideal premises, ordering your new stock at a better price, or finding a one-time-only marketing moment, it might be worth considering the benefits of same day loans.
This may be able to give you the extra boost should you need it to get settled into your new operations.
Managing inventory
The ability to efficiently manage inventory is often one of the core skills required in business, as it essentially determines a company’s ability to keep up with supply and demand without overspending.
In regards to expansion, this factor can often require some extra consideration. For example, will you be able to store your new inventory successfully, do you have the means to deliver to extra customers, and are those extra customers there in the first place?
If you plan on selling your services, or do SaaS, it is vital to think about whether or not you have the staff to take on extra work when you finally expand, as even if you offer a completely remote service, keeping up with the extra demand can require many trained employees. Training can take up a great deal of time and money, which must be taken into your budget if you plan to extend your reach to new customers.
Pricing your goods
Sometimes, it might seem tempting to increase your prices in order to keep up with your spending throughout the expansion process.
This should be considered in many circumstances, but it is worth noting that it has the ability to negatively affect your brand image, alter the validity of your projected income, and in some cases, lead you to lose loyal customers. It is nonetheless helpful in the initial stages of expansion for many businesses.
It might also be worth considering reducing your prices, particularly in the initial effort to secure more customers, as this might enable you to start taking on more inventory for future sales if you can outprice the competition.