How to expand your business without overstretching your finances

If you are running a business and you think it is time for an expansion, you need to consider several factors. 

The first and most important point to consider is that you should avoid overstretching your finances. 

This is because, even if you have run the numbers and you believe that the expansion is a low-risk proposition, you cannot guarantee that you will maintain (or preferably) increase your number of customers. This point may also be influenced by outside factors such as the health of the economy and changing dynamics within your industry.

Therefore, it is sensible to avoid becoming overstretched by the cost of expanding. If you can’t recoup the money if you lose a few customers, then you risk falling into debt and even administration. 

Furthermore, it is good to conduct detailed research and a feasibility study before choosing to expand your company. While it is often tempting to think that by expanding your business, you will be able to serve more customers and thus make more money, the truth is often more complex. 

Therefore, be as sure as you can be that your expansion will directly correlate with an increase in revenue. If it doesn’t, then you need to question why you are expanding in the first place.

However, an expansion plan can actually help to focus your mind on making your business as efficient as possible. When you are forced to look at every internal process in a new way, you may end up finding new and improved ways of solving problems, training staff, and promoting your business. 

This is how to expand your business without overstretching your finances:

If you need a new building, find a site that offers value for money and local job prospects

One of the most common requirements for a business expansion is an increase in building space. This could be anything from a new village shop to a state-of-the-art factory, but the requirements remain similar. 

You need to be able to afford the building and justify why you want to expand into it. This sounds glaringly obvious, but it can often catch business owners out. If an opportunity opens up in a large local building with additional space, it can be tempting to take the deal, even if you know you don’t strictly need it. 

Whether this is a good idea depends entirely on your business, but it is best to be shrewd about where you buy. 

If you have plans to build on a new site, you may want to contribute to the local community by offering new jobs. An example of this are the plans to build major logistics park on old AstraZeneca site will result in huge job creation.

Expanding online is a great way to widen your business presence without breaking the bank

A relatively affordable way to expand your business without taking a great deal of risk or spending a lot of money is to focus on expanding online. 

With the global economy migrating predominantly online, there is no shortage of companies that have become incredibly successful through e-commerce business models. By focusing your attention online, you don’t have to take the financial hit of physical premises or even need to hire more full-time staff. 

Instead, you could hire a select few freelancers to build you a new website, expand your social media presence and improve your digital marketing strategy. 

By expanding online, you will likely find a larger customer base and improve the power of your brand identity without needing to suffer the overhead costs usually attached to expansion.

Conduct detailed research before you make any expansion plans

Of course, before you undertake any sort of expansion, you need to ensure that you have done your due diligence. The nature of your research will depend on the nature of your expansion, but you need to ensure that you have all possible information at hand before you pull the trigger and make a potentially career-defining decision. 

You may want to learn more about the customers your expansion will target, how many more products you can produce and whether the projected revenue increase will outweigh the inevitable costs. 

Promote from within when you expand

As with any business decision, you want to find every possible benefit and maximize it. For example, if you are expanding your business rapidly, then you may be faced with a staff shortage - or a middle-management power vacuum. While you could recruit from outside your company (especially for lower-level jobs), it could be a great idea to train your existing staff, so they can move up the ranks and train your new employees.

This will make your existing members of staff feel motivated and valued, and your new employees feel as if they are being given the correct guidance by their superiors. 

You can establish a joint venture with another company

If you want to expand in order to gain access to a new market of potential customers, then you may not need to expand after all. 

Instead, why not consider entering into a joint venture with another business which operates in the market you are targeting. 

You could ask to collaborate by joining each other’s email list, for example, or selling your products via their website. There are countless different ways to enter into a joint venture, but as long as you collaborate with an appropriate and trustworthy company, then it could save you a great deal of money in the long term.