If you’re running a successful venture, you might be ready to take the next step and expand your business. This can enable you to generate more revenue and increase your profitability, providing you implement the right growth strategy. No matter how successful your current operations are, expanding a business can be risky. To help increase your chances of success, take a look at these four things to do before growing your business:
1. Consider All the Options
Choosing the right growth strategy is critical to your commercial success, so it’s vital to consider all the options that are available to you. Engaging a new segment of your target audience may prove to be a more viable option than expanding geographically, for example. Alternatively, you might find that expanding your product or service range will deliver faster growth than trying to penetrate the market.
However, you won’t know which growth strategy is best for your business until you’ve examined them all and conducted in-depth research. This will give you the data you need to be able to create accurate forecasts and determine which method of expansion offers the greatest rewards.
2. Set Clear Goals
When a venture is successful, expanding it seems like the obvious move. However, you should only grow your business if there are clear advantages to doing so. By thinking about what expansion means for you and your company, you can determine whether it’s something you are really committed to. If so, set SMART goals that will help you to achieve your main objectives.
When your goals are Specific, Measurable, Achievable, Relevant and Time-bound (SMART), they’re far easier to reach. Furthermore, they’re more likely to have a meaningful impact and get you to where you need to be.
3. Calculate Potential Returns
A potential growth opportunity might seem like a lucrative way to expand your business, but you won’t know what returns to expect until you calculate them. When you calculate the present value of an investment, for example, you can determine what the current value of a future stream of cash flow equates to. Similarly, a net present value allows you to assess the current value of a future cash flow stream in relation to cash outflows over a specific period of time. If the net present value (NPV) is positive, it could be a good indication that the growth opportunity will enhance your company’s financial performance and generate revenue.
Fortunately, you don’t have to get a degree in math to be able to figure out what the potential returns of an investment are. With a user-friendly online NPV calculator, you can access the data you need instantly.
4. Access Funding
Many growth strategies require funding, although some are lower cost than others. Before you get too far with your plans, however, you’ll want to ensure that you can access the funding you need. Depending on your requirements, reinvesting your profits or using your personal savings to finance your expansion plans could be a viable way of growing your business.
Alternatively, you may want to offer shares in your business to a family member, friend, or venture capitalist in return for funding. If you do choose this method of funding, remember to have custom contracts drawn up to protect all parties.
Instead, consider whether taking out a business loan would suit your needs. If your company is already profitable and has a steady cash flow, obtaining a commercial loan could be easier than you think. However, this isn’t the only funding option that’s available. Entrepreneurs are also relying on P2P lending and even crowdsourcing in order to finance their ventures and growth plans, so be sure to research the market thoroughly to find the best financing options for your business.
Taking Your Business to The Next Level
Ideally, every business should have an established growth strategy right from the start. However, there are times when external factors or even in-house changes can affect future plans. Due to this, it’s important to remain adaptable and update existing strategies accordingly. In some instances, small businesses are keen to capitalize on potential growth opportunities, but do so without having the necessary resources. Sadly, this can backfire when your operations are able to cope with the increased demand.
With in-depth research, innovation, and expert advice, however, you can develop growth strategies that will elevate your success, help you to secure a bigger share of the market, and take your business to the next level.
