29th October, 2019
Expanding your startup might mean renting more space, growing your team or spending on new tools. Whatever the case, you’ll want to be sure your expansion strategy covers all bases, writes Maia Fletcher.
Every small business owner has a dream of growing his or her company.
Assuming you’ve made it past the first step and introduced a new offering to the market, your next move will be to consider how to expand your operations and generate more business.
Whether it’s increasing the number of staff, opening a new location or launching a new line – it’s important to set yourself up for success.
Long-term success boils down to your preparation. Here are a few tips on how to prepare your startup for expansion.
Expenditure goes hand in hand with business expansion.
You’ll notice a substantial increase in your spending but not nearly as much in return – at least in the beginning.
Make sure you have enough resources to support your growth. Until your hard work pays off and starts to generate results, you need to have enough cash flow to cover daily outgoings.
READ: Understanding cash flow
Allocate a reasonable amount of capital towards your expansion plan. Set your expectations regarding how much revenue this outlay may realistically yield.
Along with money, other resources are just as important. Your startup will require more inventory, staff and effort. Be prepared, so you won’t fall short of these.
Ask yourself questions like: “Do I have the right transport and logistics for the expansion?”
The last thing you want is to put your expansion plan on hold because you run out of resources.
Regardless of whether you own a small startup or a multimillion-dollar company, having a good strategy is key.
An important step when establishing a strategy is to understand the risks involved for your particular type of venture. After that, ask yourself what strengths your business have that could help combat these risks.
Doing this will help you prevent failure by mitigating potential risks. It also allows you to appreciate what is going well in your business.
In addition to recognising the strengths of your business yourself, it’s crucial that others do too. You cannot prepare your startup for expansion if nobody knows about it.
With the right type of marketing, whether it’s direct, content or word-of-mouth, you can ensure that people are talking about your startup. A strong marketing strategy will allow you to create a reputation for your startup and build relations with customers.
When looking at expanding your startup, many risks arise. Businesses of all sizes should protect themselves with commercial insurance. Expanding a startup is almost like a sprint – you’re putting all your energy and resources into it.
Make sure your business is covered and protected from financial loss. There are many unexpected business risks out there, including property damage and legal claims by third parties, just to name a few.
Without business insurance, your newly expanding startup might not be able to endure the costs of these exposures. This will not only lead to the expansion failing, but will potentially lead to your startup going out of business.
Depending on what industry your business is in, you can tailor your insurance coverage to fit. Visit your insurance broker or go online to learn more about the risks that are unique to your business and how you can protect against them.
When your startup expands, there’s a point where it gets too labour intensive.
Investing in technology is important, especially in the digital age. This will prepare your startup for rapid growth in the foreseeable future.
There are many systems you can incorporate into your business, so be sure to do your research. Consult professionals who can help you to identify the needs of your business. This can include accounting software, customer relationship management or enterprise resource planning systems.
Along with digital automation, it is also important to make your startup self-functioning. With expansion, your startup can become difficult to manage.
Put in place the right processes and hierarchies so your team can manage themselves without you having to be there. This will maintain productivity when unexpected events occur that prevent you from getting to work.
As your expansion plan kicks off, you’re going to need more horsepower. It’s often difficult to hire employees for smaller startup companies, so it’s a great time to outsource your work.
Outsourcing during initial stages can reduce your expenses. It can still play a part in your startup’s growth even when you have started hiring employees! Allow them to focus on core business activities and strategy. This allows them to grow themselves.
As long as you prepare and protect your startup, you can ensure that expansion will go smoothly. There’s no one-size-fits-all approach when it comes to expanding your startup, so be sure to tailor everything according to your business.
You know your business best. After all, you’re the one who started it.
Are you setting up your first business? Make sure you have all your financial data available at the click of a button with MYOB Essentials – online accounting software designed to simplify success.