Financial Planning for Business Expansion: Things to Remember
Finance (Photo credit: Tax Credits)
Every business aims to reach one goal – to GROW. Whether it a multinational business or a small enterprise, growth could signify more prospect and more profit.
Expansion is one obvious sign of business growth. If you are planning to expand your business, it means the demand for your product or service is high, which usually turn into good return on investment (ROI). However, expansion is a challenging process to carry out. One cannot just execute an expansion instantaneously without thoroughly thinking ahead. Business owners should take into account several important things to make the project successful and not a waste of time and money.
Finance is the main factor to think of when planning an expansion. Every move dealing about money must be scrutinized carefully before spending it. You don’t wanna finance an expansion that will not generate income. So, are you thinking of expanding your business? It’s not easy; but, it is not impossible. All you need to do is be wise in terms of monetary aspect.
- Assess Financial Stability of the Business – Keep in mind that expansion can be very costly. Whether you like it or not, you need to shell out certain amount of money for the project to pursue. Thus, it is essential to take a look at your firm’s financial status. Do you have sufficient money for the expansion? Or, you need financial aid? As much as possible, finance the expansion using the company’s current cash flow. However, if it is not enough, you may try to apply for bank loan.
- Set Expansion Budget – After checking the financial status of the company, create a detailed assessment of the possible expansion cost. It will give you an overview of how much money you need to invest to achieve the project. Set a budget for your business expansion. But, you can make a little adjustment on the estimated total cost. For instance, if the total cost is $100,000, add $50,000 to cover unexpected expenses. Other than that, you must stick with your allotted budget. Don’t over-spend to avoid draining your company finance.
- Look Around for Affordable Property – Do you want to have a branch of your company in another area? Then it’s time to wander around. Look for places with remarkable potentials. Find a property in a place where people always go. The more people, the more chances of attracting potential customers. Make an inquiry regarding the cost of the property. Is it for sale or rent? Decide whether you want to buy it or just rent it for certain period. Furthermore, you can even venture overseas – that is if you are willing to take risk.
- Look for Low-cost Suppliers – When talking about expansion, it means acquiring new equipment, office furniture and other supplies. Yes, this is part of the business expansion project. Contact different suppliers and ask for prices of the said items. Compare which supplier offers cheaper prices. Obviously, it is wise to opt for low-cost items specifically if you want to avoid spend too much on this part of the expansion. However, never sacrifice the quality just because they are cheap. Quality and value should come together. Be very vigilant in choosing which things to buy for your business.
Financial aspect is just a part of the whole expansion project. If you plan the financial aspect righteously, you can realize your business expansion without emptying your finances. For companies that need financial assistance, there are banks offering business expansion loans. A successful business expansion may lead to further growth.
Category: Business, Financial Planning
