One of the most important things a business can do is create a business plan.
This acts as a guideline throughout the business’s navigation of the market and can be a benchmark to measure success against.
It is also something worth doing regularly, to constantly reassess where you are. Often, business plans will talk about expanding the business. But, while custom may be good and your business may be operating at full capacity, the ability to expand doesn’t necessarily match the feasibility of being able to do so. So, how can businesses expand when the time is right?
Some businesses manage to gain outside investment. Smaller businesses are often able to bring on more people as partners – it could be ex-colleagues or even friends who have waited to see how successful your business is before committing. Sometimes, businesses will approach angel investors, who invest their own money – for instance, film production companies often attain investment through schemes such as the BFI and regional hubs, such as Screen Yorkshire, for their project. Jeff Bezos famously had his parents invest $250,000 in Amazon in 1995.
While other businesses that have a strong idea but need money to achieve it on a larger scale may approach a businessperson who could invest. This has been seen time and again on BBC TV show Dragon’s Den, which televises the process. Lottery funds and other government-backed grants are also available, with criteria ranging from the region your business is located to the diversity of those the business might attract. The popularity of people owning stock and portfolios means that there is a network of people looking to make investments, with sites such as Seedrs marrying up projects with investors.
— BBC Dragons’ Den (@BBCDragonsDen) March 15, 2020
Take Out a Loan
One of the major ways in which businesses that need to expand through larger premises or more staff members manage it is through a loan. The loan is taken out with the confidence that your business will be able to make the repayments and continue to thrive and simply just needs some seed money to begin expansion. Sometimes people will choose to remortgage their house to use as collateral against the business, while others may attempt to ask the bank for a loan. Occasionally, people might even ask relatives for some seed money as a loan that will be paid back.
The kind of loan you might want will depend on whether you choose a secured or an unsecured loan. A secured loan is often referred to as asset-backed as you place your business’s assets against the loan, which often results in more being offered and a longer repayment term. An unsecured loan results in a higher risk for the lender – the lender will get nothing as collateral if you are unable to repay the loan – and is often attained through the business’s position in the market and its forecasted turnover.
Business expansion should be a heading on every business plan – after all, if a business isn’t expanding, it’s not growing. There are countless examples of businesses who have refused to adapt and grow, with Kodak being the most famous one. With so many options available for that business growth, all you really need is confidence in your ability and confidence in your business. Whether you choose a loan or an investment opportunity, the efficacy to succeed will play the most important role.