Congratulations! You’re a successful small business owner with a popular and stable business. So what’s next? If you’re like many small business owners, growing your business and watching it expand can be a tempting but intimidating process. Here are some guidelines to help you grow your business smart and strong.
Work Out a Plan
Growing your business can be a vague concept and mean different things to different people. Do you want to double your customer base, hit revenues of $1 million, open a new branch, or expand to include different product offerings? Whatever your goals, write them down, and then try to figure out the best way to achieve them.
Once you know what your goals are, plot a detailed road map to achieve them. Talk to your accountant and banker to get an idea of what’s realistic and how to go about achieving your goals, and take your plan into account each step of the way to reduce discouraging surprises later.
Keep Track of the Numbers
Even if you know how to get where you’re going, you have to keep your eyes on the road to avoid getting lost. Financial planning can be dull, but it’s a necessary evil to keep track of your progress and identify trouble areas before they become growth-killing burdens.
It’s a good idea to discuss with your accountant which figures and ratios are most important for your particular business and how to keep them healthy. Certain figures, such as margins or debt to equity ratios, are more important in certain industries than others, or can have very different implications depending on the type of business you’re running. Ask your accountant which numbers you should be monitoring most closely and what the industry norms are that you should be striving for.
Invest in Growth
Very often, substantial growth with require innovation and resources that aren’t free. Reaching out for financing can an essential part of healthy business growth.
Different businesses are suited to different types of financing. If you’re looking for equity or want to get a traditional bank loan, knowing your numbers and having optimized your financial ratios will be essential for attracting investors or getting through a bank’s approval process. For other businesses, alternative financing options may be the best way to get funding.
For instance, if the growth you envision involves significant investment in equipment, equipment financing can be a relatively quick way to get the tools you need to grow. Businesses that want to expand and which do a lot of cash or credit card sales, such as a shop or store expanding to a second location, can benefit from revenue-based financing or merchant cash advances, which allow you to borrow money to put into your business now and repay it with a percentage of future sales.
Deciding on the right financing option, like deciding on the best path to growth, is something you should consider carefully and discuss with your accountant or other financial adviser. With proper planning, you should be able to get the resources you need to make your business bigger and better than ever.
