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It is time to expand when you are happy with the performance of your enterprise

By unknown | Jun 28, 2007 | COMMENTS [ 0 ]

Once you are satisfied with the performance of your business you should start preparing for expansion.

Once you are satisfied with the performance of your business you should start preparing for expansion.

Many issues need to be considered, which will be determined by the product or service you provide.

If you manufacture or distribute goods, you will think about more products, new or improved equipment, leveraging your logistics, employing more drivers if you use your own vehicles, and more factory space.

You will also need to decide which matters get preference and to determine the cost of the expansion process.

If you provide a service that needs office space and you have attracted more clients, you will need more space and more staff to cope with the bigger workload. You will also need to buy or rent more office equipment, which means more money out of your pocket.

If you operate from your own office you should save on rent and might even be able to extend the building when you need more space. But if you rent your premises, expansion will cost more money. You can either move to bigger offices or rent another office.

Think carefully about the advantages of locating to new premises. A retailer who wants to expand must usually consider opening another branch, because extending your premises is often be impossible for rented space in a mall or a shopping centre.

Much the same thing applies if you run a general dealer or a similar type of shop.

Extending premises often won't help because you will still be selling to the same people in the same place. So consider creating another presence somewhere else and expanding your reach.

Expansion means that more money will be coming out of your bank account before you can start making profits.

Often the exercise is much like starting up again because you will have to use most of the money you have accumulated for the expansion. Do not expect big returns overnight.

But one important advantage of being involved in a profitable business is that it opens doors to get finance easier than when first starting a business. You have created a credit record and have something to use as collateral for a loan. And maybe you have even developed a better understanding with your bank manager.

But do consult an accountant to get proper advice because your banker should be expected to put his interests above yours

Don't forget to consider venture capital, a silent partner or an investor. Venture capitalists lend you money in exchange for a share in your company. You may only sell your shares to the public if you are registered as a public company, but you may add partners if you have a close corporation.

Another option is that you can go to government vehicles of finances such as the Industrial Development Corporation, Khula, National Economic Empowerment and Umsobomvu Youth Fund for help.

These institutions are always willing to help companies that wish to expand their businesses.

But, there are criteria that you have to meet for assistance.

It won't hurt to find out if you qualify. You can even go to these organisations' websites to find out more about the help you can get from them.

The most important thing you should do once you start thinking about expansion is to ask yourself: am I making enough profit to sustain the business during the expansion?

Your answer to this question will tell you if you are doing the right thing by expanding. This is where you have to be wise in making decisions because they could easily bankrupt you.


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