Article Contributed by Finnegan Pierson
Many entrepreneurs aren’t satisfied with only being the head of a local small business. For many business owners, their true dream is to oversee a rapid expansion of their company into a national or even international brand. However, actually performing such an expansion successfully isn’t easy. It can be a very complex and risky process. With that in mind, you should take all the precautions possible before launching a significant expansion of your company. Here are some tips that can help you prepare.
Set Goals that Are Actually Attainable
Before you launch an expansion, you must first set down specific goals so you can focus on laying the groundwork towards achieving those goals. However, unlike your lofty aspirations for your company, these goals must actually be something that can be feasibly accomplished.
Launching four new locations for your chain restaurant is one such goal. Alternatively, it may be adding ten new distributors for your fashion products or increasing revenue by $1 million. Overall, you need to know where you’re going, and it has to be something realistic. Keep in mind that the largest companies didn’t expand to that size over night. According to Walmart, it took the retail giant five years to expand to 24 stores.
Plan for Sustainability
Even if your goals are achievable with your current resources, they may not be sustainable. Keep in mind that even the big corporations often fail at expansions. As Harvard Business Review reported, Target’s expansion into the market in Canada failed spectacularly.
Determining sustainability isn’t a simple task. It requires significant number crunching. Factors you have to consider include your current infrastructure, your workforce, your suppliers, you distribution pipelines, your management personnel, your financial capital and more. You also have to examine your ratio of debt to equity. Whether or not you can sustain the growth you want with what you have needs to be determined by taking all these factors into account.
Consider Financing Options
An expansion of course needs to be funded. If you have enough funds in reserve to invest into such an expansion, you may be on firm ground. In other cases, you may have to borrow to allow the expansion to be realized. Beyond traditional lenders like banks you may want to consider other options. For example, you could implement marketplace lending. This is a form of peer to peer lending in which individual investors lend funds to borrowers directly. These kinds of transactions have become popular as of late and are mostly transacted through online lending platforms.
Whatever kind of lending you implement, make sure you have a solid plan for paying back the borrowed funds. If you borrow more than your forecasted revenues, you may find yourself in bankruptcy court. According to Fundivo, the number of outstanding loans to small businesses has surpassed 23 million.
Prepare Your Employees
To make an expansion happen, you need your personnel and workforce to on board with your plan. Certain employees may need to be shifted to other locations to oversee new branches. Make sure you alert the employees you have in mind of the need to move well in advance so they can make the proper adjustments with their families to prepare. It can cost up to $97,166 to relocate a single employee.
You may also need to institute new training programs to train employees on how to handle the expansion. Recruitment efforts will also of course have to be made to facilitate your company’s growth. Do the research to determine exactly how many new positions you will need to fill. Some may be full time. However, others may be part time positions or even temporary third party contractor work to complete the expansion.
Overall, you are likely to experience some growing pains as your company moves along with its expansion plans. However, if you have done the proper planning to prepare for the growth in question, you should be able to successfully exit the transition as a larger and more profitable company.