Ways to Finance a Business Expansion : Have you decided that it’s time to expand your small business but aren’t sure how to begin the process? If so, you’re just like thousands of other entrepreneurs who started out with a solid idea and turned it into a thriving entity. Now that things are going well, it’s time to branch out and replicate that original concept for the long-term.
Fortunately, there are many ways to grow or franchise your small business, and all of them are within reach of hard-working, creative owners who have the patience and motivation to make an expansion happen. How do you do it? What’s the first step? How to deal with the obstacles? Here’s an overview of an expansion plan that can help you answer all those questions. Better yet, the following steps are not carved in stone, so you can adapt each one to suit your particular situation.
Table of Contents
Create a Fresh, Detailed Business Plan
One of the most effective ways to get an expansion underway is to assume you’re starting all over. If you can put yourself in the same frame of mind as you had when you first opened the doors, however many years ago, you’ll be ready to write a workable, realistic business plan for growth. As the old saying goes, “the devil is in the details,” so expect to spend several hours on getting all the essential numbers on paper.
Note, there are several very good templates available for no-cost downloading that can make this chore much faster and less painful. The more you can do a deep-dive into estimated monthly expenses and revenues, the better. The most common error people make at this point is assuming that they can get by without making a new plan at all or without making a detailed one.
Generate Funds by Selling a Life Insurance Policy
Financing the costs associated with expansion should take priority. That’s why it’s so important for owners and founders to use every possible resource possible. If you have a life insurance policy, you’re one of the fortunate entrepreneurs because you can access immediate capital by selling it via a life settlement. The first step is to go online and use a calculator for selling your policy to see how much you can get. Life settlements are a smart way for owners to free up money that can go directly into expansion.
Diversify Products and Services
For many merchants, the entire concept of growth revolves around new products and services. Make a list of potential additions you could make to your current menu of offerings. For instance, if you sell topical sunblock lotion, a logical add-on product could be sun hats, long-sleeve tee shirts, and sunburn pain relief creams.
Those are all things that buyers of sunblock lotion would likely be interested in. The point is that there are add-ons for almost every product and service. It just takes a bit of time and brainstorming to come up with a list of potential candidates. Through this diversification you can also rework your SEO strategies by using these new product keywords to increase your ranking on popular search engines.
Another reliable source of funds is right before your eyes, on the monthly financial report. This step is all about reducing current expenses so that you’ll have more money available for future ones. Don’t panic if you do a major examination of the books and realize that there aren’t any significant cuts you can make.
Chances are, if you’re ready to expand, there are a few places you can cut back. In this regard, every company is unique, so leave no stone unturned when hunting down potential cuts. Focus on line items like petty cash, utilities, and bonuses. Growth entails a decent amount of sacrifice.
In the digital age, exporting is not as complex a process as it once was. Look for nations where you could realistically compete with both local and other international sellers. If you sell handmade leather purses and wallets, chances are the uniqueness factor of your offerings will help you break into any number of foreign markets.
Exporting is about more than just adding “international sales” to the e-commerce store. In some nations, like China and Japan, just to mention two, it can be much more lucrative to work with an in-country seller who can place your goods in brick-and-mortar retail outlets. Explore partnerships with overseas wholesalers who specialize in what you sell.
Leverage the Power of Referrals
Your current customers are one of the best resources you have when it comes time to grow. Make a list of your top 10, 20, 100, or more regular clients and contact each one directly. What should you ask?
Let them know how much you value them, and that you want to offer them something in exchange for referring a potential new customer from their personal network of friends, family, and acquaintances. What you offer is up to you, but many owners use incentives like discounts, free items, and other goods that have real value. Not everyone will respond, but you will possibly be surprised at the number of new customers you generate from this strategy.
Add Stores and Branches
When most entrepreneurs start thinking about making the move from small to medium-sized, the idea of adding stores usually comes to their minds first. If you can make the case for adding retail outlets, based on return on investment, then this kind of physical growth can be an effective way to widen your customer base, increase profits, and move into the next phase of your company’s life cycle.
Putting the Pieces Together
Few people will be able to use all the above techniques, so review each one and see how it fits into your overall plan. However, two of the seven ways are almost universal for anyone planning an expansion. Those two are writing a new business plan from scratch and generating funds however you can. Remember to be patient, because growth takes time and can mean putting in extra hours on occasion. In the long-run, the reward is well worth the effort.
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