Accounting & Finance
5 Things To Consider When Expanding Your Business
Business expansion requires more revenue, so before you consider what your company needs to complete its development, first and foremost, commit to a sales strategy that will create income in new territories. Even with investment to get set up with new products and services and roll out marketing campaigns, before long, the sales revenue needs to cover costs and then provide a profit to satisfy investors and stakeholders.
Taking your business to the next level is not an overnight success. Even with the best sales strategy, there are many other considerations and obstacles to overcome before you can say it worked!
One way you can proliferate is to acquire another company, and then you will have their assets and sales revenue. Plus, the infrastructure includes staff, buildings, equipment, and vehicles. However, it can take too long to identify the business you want and get the terms you need to secure the purchase. Plus, there’s the merger of the two firms to consider.
Will there be duplication of resources and, therefore, unnecessary waste and expense? Bringing together two company cultures is a challenge, too; hence, this path can fall into the ‘too hard’ basket.
Expanding organically is a more natural process; however, it is costly. We’ve identified a few areas that can make or break company expansion aspirations. In no particular order, let’s first look at vehicles.
If company cars are necessary within your business, it’s vital to consider whether you need to expand your fleet. Purchasing multiple cars will be expensive, so measuring the necessity against the cost is important. If you do, it’s worth looking into vehicle tracking too, as this improves safety amongst your fleet and ensures you can keep tabs on them while they are out, to improve efficiencies and ensure they are driving safely. Vehicle tracking systems can also deter thieves or increase your chances of finding a commercial vehicle if it has been stolen.
Always do your due diligence and include reading reviews. For example this review of the Audi A3 is comprehensive and it highlights what you need to look for in a company car.
Employees are an added expense to the business, so it’s important to consider whether you need staff all year round. If not, it could be worth looking into temporary staff instead and hiring people on a contractual basis.
StrategyDriven encourages employers to work out how much work is necessary to spread across the team before hiring new starters, because you may find you don’t need the number of employees that you initially thought.
When you take into consideration the fact that you’ll be hiring new employees and possibly paying for further training, it’s important to assess the working capital and cash flow. A financial statement with profit and loss projections will identify strengths and weaknesses in your financial position. Work out whether you’ll see the profit still after expanding your business. Although an expansion may make sense, will it be good for your company? This leads to market research and assessing competitors
Market Research and Competitors
What is the market opportunity? Conduct a thorough analysis using a SWOT statement. It’s better to learn of a change in direction for your company before spending the money on the project. Plus, what are your competitors doing in the area? Learn through other company’s errors and change course or make the necessary adjustments to avoid leaking money. Forbes suggests researching what’s worked and what’s failed with your competitors’ growth into new markets. Knowledge is power, so give yourself the time you need to be adequately resourced for a successful launch into unknown territory.
There is never a dull moment in business. With competitors hot on your heels, standing still is never an option. Even in uncertain times where much of what can affect a company is out of your control, focus on what you inherently know works for you and your customers and growth will happen.