Questions to Consider prior to Business growth
Business growth is one of the key goals of most small businesses. Business growth is always exciting for small business owners because higher growth leads to an increase in production, product lines, number of customers, sales, and profits. However, an unplanned rush into business growth risks bankruptcy due to higher expenses than actual revenues. Thus, every small business owner needs to assess some important questions before deciding to grow a business.
– Do I have regular customers?
The business should have a strong customer base with regular and loyal customers for steady and efficient growth. If the business has regular customers, it can continue to grow by investing steady earnings from these customers.
– Do my customers want my business to grow?
The small business owner needs to assess whether the target customers want new products, services, larger quantities, or new designs and ingredients. If the regular customers and potential customers demand greater variation in products, more hours of services, or an increase in stores, the business can attain larger customers by growing the business size.
– Do I have steady revenue and profits?
Before deciding to grow the business, the business owner needs to assess the performance of the current business activities. If the business has steady revenues and a positive profit margin, it can generate positive cash flow from the business to cover the expenses of business growth. Moreover, growth in revenue and profits indicates the increase in market demand for the business’s products and services, which is also important for business growth.
– What is the condition of the business industry?
Along with assessing the business’s financial condition, the business owner needs to assess the condition of the business industry. If the industry is shrinking, there will not be many growth opportunities. If the industry is booming and predicted to be growing in the future, business growth can help attain a larger industry share and a greater number of customers.
– How is the condition of my business management?
The success of business expansion and growth largely depends on the competencies of the management to handle the increase in business activities. The small business owner needs to assess whether the management can efficiently manage a larger number of employees and use all other resources to increase production, loyal customer base, and profit margin of the larger business.
– What is the condition of my business competitors?
The small business owner must regularly assess business competitors and fund out whether they are expanding their business or not. If most of the business competitors are growing their business, it increases the risk of losing market share. The business owner needs to develop a steady business growth rate compared with the competitors to attain market control.
– Do I have sufficient capital?
Business expansion and growth require large capital to bear the expenditures. In this case, the business owner needs to assess whether there is sufficient capital available. Moreover, the owner needs to assess the availability of sources of capital to cover up urgent expenses during business growth. For example, growth in business leads to higher expenses, debt obligations, higher sales, and a significant increase in accounts receivables. Thus, the business faces an imbalance between cash inflow and outflow. In this case, to cover the business expenses, the business owners can use different financing sources such as invoice financing. This way, the business can collect capital against the outstanding invoices and fund business growth.
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