The struggles and challenges of starting a business are no secret. Virtually every small business owner in his/her beginning stage has asked the same set of questions. “Should I do this?’, “Can I afford it?”, “Will I make it?”, “Am I crazy?” While each will hope for the best, unfortunately not all will be successful soon after opening. However for those that manage costs, maintain healthy margins, build a client base and consequently survive will face a new dilemma down the road. Owners must face the maker or breaker of small businesses: Expansion. Now, somewhere on the path between fruition and failure lies a new and more difficult question to answer. Having sustained some profitability, or at the very least broken even, should business owners risk all their hard work for some growth?
Small business expansion is achieved through a plethora of strategies and techniques, yet it is important to bear in mind that each method is not necessarily optimal for every company. On the product side, one can expand into a related market, introduce a new product into new or existing markets, and increase channel distribution. Externally, an owner can utilize location expansion, acquire competitors, and pursue new marketing routes. Both sides of expansion have great potential when executed properly, yet the former is more feasible for small businesses in their developmental stages. The aforementioned potential, when met, increases the business’ value, attracts higher quality employees, lands larger clients in greater frequency, and approaches the ever sought after economies of scale.
These benefits can be dangerously tempting. Who wouldn’t want to dominate their market niche? But be prudent. Not every business or business owner is ready for, capable of, or even in need of expansion. Countless businesses have failed in their pursuits of growth. Every expansion venture runs the risk of encountering ownership conflict, personnel problems, ignorance of customer service, dilution of company culture, and most critically, financial constraints. Conversely, all of the above can prove to be innocuous, the company can expand too fast, spreading its resources too thin to keep up with the peak in growth and demand.
In order to determine if your business is equipped for expansion, you must undergo a critical and considerate evaluation of your company’s circumstances. Doing so will help to circumvent the previously mentioned roadblocks if you ultimately do take the risk. As an owner you must be introspective. In today’s unforgiving credit market, owners must be prepared to provide self-financing. Owners are usually critical to their business’ functions, and it becomes increasingly difficult for them to remain integrated in every operation as the company grows. Therefore, you need to ask yourself if you are comfortable delegating important tasks to others, and ready to relinquish control over certain company facets. Many people are not, and understandably so. After all, this business is your brainchild, and you are liable for its every move. To do so requires colossal levels of trust in your personnel. Trust can be expensive. Are you willing to put it on the budget?
A marketplace and competitive environment are beyond any small business owner’s control. Consequently, when considering expansion, you must anticipate and scrutinize the field you are entering. Think about the potential client base you are approaching. Evaluate its substance and sustainability. Far too many businesses rush into expansion off a whim or promise of a large account, and suffer the consequences when this lead doesn’t pan out. Similarly, as an owner be careful to not assume that a single temporary spike in demand will lead into a long term trend. This assumption has caused many businesses to run off a cliff, so make sure to pace yourself. Holding the above factors constant, compare yourself to the current and potential competition. In many industries, every firm provides a virtually homogenous product, and there is not much differentiation. Consider whether or not your expansion effort will set you ahead of the pack. If you are expanding into a new market, understand the scale and power of the incumbent firms, and ensure your business is able to survive a fierce competition. Remember, there are many large operations dominating multiple product and service markets with fiercely low costs and increasing returns to scale.
A necessary component of expansion is clarity. A deliberately defined purpose and mission for expansion will help ensure not only that you realize your goals, but attain them more efficiently as well. This vision should be shared and understood by all members of the business. In defining your plans for your business, you may derive your process of expansion, or you may even decide to abandon the idea altogether.
You have evaluated yourself, your business, and your environment, and decide to proceed. What you now need most is the fuel to the expansion fire: capital. In order to catalyze the growth tools previously described, the most commonly contacted source is a traditional bank. In this post crisis era, if you have A1 credit, everlasting patience, and willingness to collateralize an arm and a leg, you may have a chance to obtain a loan. Even if you have suitable credentials, banks may still disregard you if your requested amount is too small to be worth their time. If denied, where does one turn next?
Effective and convenient solutions are emerging as alternative capital solutions to the traditional bank loan. A Merchant Cash Advance, also known as a Business Cash Advance, is now being provided by numerous firms. MCA firms provide flexible funding to small businesses, yet have significantly lower criteria for approval, require no collateral, and fund clients within days. Many organizations and activists stigmatize the MCA industry, claiming that it exploits the vulnerability of small businesses across the country. This scrutiny is justified, as many MCA firms take advantage of clients through unfair rates, hidden fees, and contract clauses. However, Xpress Loans 911 Funding is an industry individual due to its superlative regard for clients. Xpress Loans 911 prides itself in its culture based on family values and ensures your business will be treated with nothing but the utmost dedication and respect.
