Any good business plan includes a set timeline for expansion and growth. Progress is always inevitable and choosing to stay comfortable and stagnant will not do your business any favors. However, the process of scaling up your business is not a walk in the park — you have to consider several factors before deciding if it’s the right time to expand.
Successfully scaling up your business gives you the advantage of having more commercial opportunities, helping you sustain your operations and lock long-term growth. In this post, we’ve listed down three of the most important considerations before you can kick start your plans of scaling up.
Evaluate the Current State of Your Staff
Your staff is pivotal in ensuring that your business triumphantly scales up. So be sure to nurture a culture of teamwork and collaboration to ensure that everyone is in tune with your visions of expansion. The demands and pressure of scaling up your business can affect your staff, so you must sustain company morale and keep employee satisfaction at optimal levels. You can do this by providing opportunities for personal growth or by developing mentor programs. Doing so can motivate your employees to perform their best at a time where your business cannot afford any losses.
Consider Changing Your Business Structure
If you started your business from the ground up, you’re probably operating under sole proprietorship. However, scaling your business requires changing your structure. That’s why it’s recommended to incorporate into an LLC, where you can safeguard your personal finances and assets in the event that your business incurs any debt or runs into legal troubles. Moreover, many investors and clients see stability in businesses that operate as an LLC or corporation, so eventually shifting your business structure is always a good move.
The specific steps will depend on where you are scaling your business. Some states might have extra requirements when forming LLCs, such as publishing copies of your articles of organization in two newspapers, while others might charge more or less in LLC formation fees and taxes. In general, however, shifting from a sole proprietorship to an LLC entails having to register your business name and an agent, filing your certificate of organization and an official operating agreement, and then applying for an EIN. By changing your business structure to an LLC, you can better secure the success of your expansion plans.
Assess Your Financial Readiness
The first thing you have to consider when scaling your company is checking if your business has enough retained earnings to cover the costs of expansion. You have to consult your accounting department and check your books to ensure that you can still sustain your operations during the expansion process. You also have to make sure that you have a contingency plan in case something unforeseen disrupts your business’ operations, especially now that your business is in a vulnerable position.
In one of our previous posts, we mentioned that a lack of capital can’t hold your business back. So if you think your business is ripe for expansion, but don’t have the sufficient funds, you can open your business to outside investors who can help support your goals of growth. These people are known in the industry as angel investors, and these individuals are one of the largest sources of capital for high-growth SMEs. Angel investors take money out of their pockets and invest it in companies that they think have the potential to achieve market success. Your business can easily attract angel investors as long as you can prove that you have solid financial ground and have a good record of loan repayment. With ample support from outside investors and a foolproof financial outline, you can mitigate losses and failures in the process of scaling your business.