Bigger and better: that’s the dream for any business owner, isn’t it?
Who wouldn’t want a bigger space, additional staff, new products and services, and naturally, more sales! Of course, you can’t expand your business by opening a new branch or hiring more staff unless your finances allow for it.
As with all business decisions, it all comes down to the almighty dollar.
Reckon you’re ready to start expanding? If so, you’re going to want to sit down and pay attention as our bookkeepers in Melbourne share what you need to do to lay the groundwork for that bigger and better version of your business.
What is an expansion of a business?
Companies and businesses will always seek expansion opportunities. Business owners know the different business stages that require different business strategies to maximise your success, whether you’re starting up, growing, hitting maturity or revitalising yourself.
While most focus on new locations and more staff, that isn’t the only way you can expand.
What about new products and services? Extensions to your opening hours? Or upgrading to better equipment that lets you get the job done in half the time? Or partnerships with other businesses? These are types of business expansion too, you know!
Expansion in businesses can take a number of different forms, such as:
- Opportunities for merging and partnerships
- Launching new product and services
- Adding more staff
- Opening another branch or location
- Adding franchise
- Entering new markets
- New and improved marketing strategies
Whatever your expansion looks like however, it’s important that you plan it out properly.
How do you know when it’s time to expand your business?
Step one in any business expansion: determining whether or not it’s time to expand.
With so many things happening in your business almost every day, how do you know if it is the right time to expand?
Luckily for you, there are some obvious signs that your business is ready to take the next step towards expansion.
Increase in market demand
One of the most important roles of bookkeeping is telling you how your sales look, as well as alerting you when you start making more sales than usual.
Whether it’s a competitor shutting their doors or one of your offerings just taking off, an increase in demand is probably the hardest to miss sign that your business is ready to expand!
Your new idea takes off
Innovation will always be a vital part of product and business development. If you see that your customers are asking about a new product or a new service that you might be able to provide, then could it be a sign that your business is ready to start growing.
For retail businesses, it could be an improved version of your product or coming up with a new one altogether. For service businesses, it could be a unique way of offering your service, such as mobile service.
Whatever it is, it’s taking off – and that means you’ll need to expand your business to capitalise before your competition takes notice.
You need a bigger space
Ideally, you’ll have enough space for all your operations and team to go on effectively. If it starts feeling a little bit cramped however, it’s probably a sign that it’s time to expand into a newer space.
Operating comfortably requires a spacious and convenient place whether you specialise in production, manufacturing, delivery or retailing.
If you happen to see that the workspace is cramped up, then you may need to expand.
You can look for a bigger space as you start another branch or try to renovate your existing space to make it more spacious. Either way, you’ll need to expand your physical space.
You have stable cash flow and sales
Just to be clear, we aren’t advocating spending for the sake of spending.
That said, while keeping a certain amount for emergency purposes is a must, business owners should remember that money is for spending.
Under normal circumstances, it can be hard to justify expanding the business – if your cash flow and revenue are stable however, you may be able to actually give this some thought.
For example, maybe you can finally upgrade your equipment like you’ve always wanted, or you’ve built up enough of a cash reserve to buy out a competitor and absorb it (and its business) into yours.
As with all things finance-related, it’s essential that you have the right figures to back you up on this.
In these cases, it’s best to consult with a bookkeeper in Melbourne who can help you manage and assess your cash flow and help you decide when expansion is viable.
You need extra help to make the job done
You don’t need to do everything yourself – a good team brings experience, ensures things run smoothly and take the burden off your shoulders.
Is your team struggling to meet demand? Are you finding yourself having to jump back into the trenches because they’re just that swamped with work?
If so, it might be time to expand your business by expanding your team.
Whether it’s to help with new products and services or to keep up with increasing demand, a team that needs extra resources just to keep up is one that needs expanding.
What should you consider before expanding your business?
Expanding your business is easier said than done. As with any major business decision, there are a multitude of things you’ll need to look at when deciding whether or not to take your business to the next level.
Before expanding, you will need to sit down and ask yourself if you are indeed ready to go to the next level.
And that means you’ll need to look at a number of different things.
Do your market research
Expansions work best when you are prepared. That begins by doing thorough market research to see if your expansion plans are viable.
That means looking at:
- Demand for products and services
- Level of competition
- Whether or not your expansion area is currently being served
- Your unique value
You may need to cast a wide net when researching all of this, including looking at your website statistics, scoping out the competition, reading industry publications and statistics and more.
It’s a lot of work- however, it’s crucial in helping you determine whether or not your expansion plans are sustainable, and can help you avoid sinking money into a failed venture.
Hiring additional staff
Hiring more team members is a form of expansion itself – however, it’s worth remembering that many other types of expansion may require you to expand your team anyways.
For instance, if you’re bringing in a new service, you’ll need new staff members to provide it.
Planning for expansion means planning your staffing needs. You need to assess your finances further if you can afford to hire new staff, as well as determine whether or not your current team can do the job with new equipment.
It doesn’t even have to be full-time and permanent hires, either – you may opt to outsource particular jobs or rely on temp workers to shoulder the burden while you figure out your staffing needs.
Delivery of goods and services is a key factor that you need to consider in expanding your business. It’s great that you’re expanding things – but how are you going to arrange your resources to do that?
Too many business leaders fixate on the opportunities, and end up forgetting about all the nitty-gritty details that go into turning it into reality.
Before you commit, it’s important to think about things that affect how feasible your expansion is such as:
All of these logistical concerns need to be accounted for before you commit to your expansion!
Expanding a business takes money – that’s why it’s so important that you plan it out well!
Funding will be the number one consideration – and in many cases, limitation – when it comes to expansion. It’s important that you go over the numbers to ensure you can afford to expand without putting your finances in danger.
While this is primarily the territory of accountants, it’s also something that bookkeeping firms have a role in thanks to our focus on recording day-to-day transactions and finances.
Armed with this information, you’ll be able to determine whether or not you can comfortably afford to take the risk, or if you should wait until circumstances improve.
Are you ready to expand your business?
If so, you’ll need to make sure your finances are in good order first!
Keeping an organised bookkeeping system is crucial, even if your business isn’t planning on expanding.
And that’s something we can help with.
Maximum Business Solutions specialises in providing a wide range of bookkeeping services in Melbourne for small and medium businesses just like yourself.
We can help organise your expenses, track your sales and manage your debts and other business finances.
Unlike other businesses, we don’t just do that by looking after all the work for you – we believe in setting you up with systems that let you do it yourself and maintain control, which is why we have such a strong focus on cloud bookkeeping services.
Enjoy the benefits of secure and convenient cloud-based bookkeeping in Melbourne anywhere and anytime. We’ll tell you whether to choose Xero vs MYOB, whether Xero is good for a medium-sized business, help set your system up and provide cloud bookkeeping training.
So if you are unsure where to start and how to assess your business finances, feel free to discuss your options with a bookkeeper in Cheltenham today.