Business Credit & Capital No Comments

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This is one of the trickiest questions small business owners encounter during their entrepreneurial careers. On one hand, a small business model can provide financial independence for basic needs and daily comforts. However, it’s revenue stream tends to be capped. On the other, any attempts to break out of this comfort zone will bring more risk to the business since resources including capital and manpower might be spread out too thin. 

It quickly becomes apparent how vital it is to weigh the pros and cons of business expansion. As the owner or CEO, this decision can make or break your business. 

Pro#1 – Increased Output Efficiency and Scale 

As you expand, your consumer base gets larger, which ultimately leads to more demand for your products. The more products you order from your manufacturers and suppliers, the cheaper it costs to make them. Moving to a larger facility with more capable assembly lines reduces both time and cost linked with production. 

Pro#2 – Improved Brand Exposure with Multiple Locations 

The profits you generally make from your single store relatively increases as new branches open up in domestic and international markets. Furthermore, you have the capacity to introduce new product lines, test new target groups, and deploy different operational strategies to analyze which approach best works for your type of business. 



Pro#3 – Greater Impact Towards Your Local Community 

Many small businesses that choose to expand need to hire more people to compensate for the increased workload. Where better to look for manpower to fill this need than your local community? By hiring local residents, cash flowing into the community helps stimulate demand for other products, create other businesses, and overall improve the quality of living within the area. 

Con#1 – Greater Capital Needs

Scaling up means your business will be sucking in more capital to fuel its operations. You will need more employees, more equipment, and more space. Fortunately though, there are services like that of Business Credit and Capital, which provide funding to small businesses with no collateral and fixed payment plans. 

Con#2 – Increased Logistical Complexities 

As businesses expand, they capture larger portions of their target audience and market. However, it also opens the business to a myriad of different and more challenging demands from consumers and partners. The business’ workflow and necessities are now distributed too thinly as opposed to being fixed in one location, so there’s still one of you but now orders and demands are coming in from all directions. 

Con#3 – Weakened Business Culture and Relationships

Because you have multiple locations to visit and work on every day, it gives each office a minimal amount of your time and attention. Business meetings that were once held on a daily basis will now be held weekly or monthly. You’ll also be unable to stay long enough to study your target market for each location and how to best serve their needs and demands. 

Things to Consider 

Although it brings added risk, expanding does seem like a more exciting and potentially lucrative route to take for the entrepreneur at heart. You can minimize risk by making sure every phase of expansion is dealt with properly. 

For starters, decide where to expand to. Look for untapped areas where your product or service will flourish with minimal competition and resistance. Determine how much demand and interest exists and can be generated through the right marketing campaigns and sales models. 

Another thing to consider is to study how to replicate the business model. Trying to take your current business template and transferring it to a new location can be deceivingly challenging. Secure a solid business model as early as possible and select a location where it will thrive. It may take months if not years to fine-tune the right business model for you, but is absolutely a worthwhile process to undertake. 

Last but not least, make sure to hire the right people. It can be easy to manage a staff when you have a single store. However, the quality and skill set of people you hire to work for you and represent your brand at different locations can vary greatly. Make sure they are the right cultural fit and have a sound technical background that can add value to your brand.

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