You’ve come to a point where your business has been so successful that you want to expand it but you don’t know how where to start so where do most people start when it comes to making the decision to expand their operations? The first step begins with your strategic plan as it holds the blueprints as to where you want your business to be whether it be in five years or twenty. The general idea when it comes to modifying your strategic plan depends on where your focus is in terms of length as if your goals are short term you’d have to put more focus on exploring new markets and offering a single amazing product/service. If your goals are more long term then your attention would be on figuring out how to implement these three key areas of growth in your business’s operation plans which are:
Markets: This area is all about offering your current product/services to a new target market or for a different purpose.
Capability: This area centers on a wide range of things related to your business such as your organization’s assets, skill set, products/services, technology and more. You could picture a scenario where another business is acquire that offers a service that attracts more customers to your business thereby expanding it.
Location: This area focuses on where you would physically open your second business to get more people interested in your business.
Once you’ve figured out which of these three things your company can optimize on you can now think of how you’re going to use this information to the benefit of your business. This is where you’d want to brainstorm a couple financial models your business can implement if you want to expand your business. At this point you can refer to financial experts like your CFO or your financial adviser but before that here’s some things you’ll need to do:
Creating models- Prepare models that would represent the 3 areas of success which are low, assumed and high expectations. Write out what would be your projected expenses, revenues and earnings. You should also include financial statements like your inventory, accounts receivable/payable, fixed assets and any debt incurred.
Consider changes- Account for changes that can come in your operation because some factors such as lay-offs and pay cuts can interfere with your operations. These are somethings that can be easily ignored.
Value estimation- Find out how much value your business could be worth prior to and post expansion because sometimes you may find out the value after everything is said is done is not as large as you hoped.
How you’re going to pay- You can go to banks or choose to self-fund your business and if not there are other other finance resources available like investors or alternative lending firms.
It can take some time to fully transition into being an owner of two businesses so while you’re working on the finishing touches on your second business you should also devote just as much time into your current business as well. This may be a know brainer but for some people trying to move their business to a new location this may be an overlooked statement. When your business lags and your new or second business hasn’t taken off yet this is a recipe for disaster since both sources of your flow of income has been disrupted. Try to balance out how much time you devote to both unless an emergency comes up. With that these are some of the things you can think about before making that big move and if there is one last piece of advice that can be given it’s that coming to others for help or advice comes in handy and like your business should not be overlooked either.
This article was sourced and modified from https://www.entrepreneur.com/article/226109