Expanding business is almost as daunting as starting one. Here are some tips for small business owners on getting the necessary finance for your successful growth.
1. Know your business
To start off, conduct a detailed analysis of your business. This should include:
Knowing your business’s strengths and weaknesses: You can find downloadable SWOT analysis templates online.
Key risks: Are there any competitors moving to your area?
Profit margins: How will the direct costs of expansion impact your revenue?
Revenue streams: Does your café make most of its money from selling coffee or food?
Suppliers: Do you need to negotiate new deals with suppliers or expand your pool of suppliers to facilitate an expansion?
Customers: Consider the ratio of new vs returning customers.
Employees: Will you need to hire more staff for the expansion?
Storage capacity: Do your current storage levels cater for growth?
This information will show you exactly what will be needed for the next stage of growth. Lenders will also look to this information to see you are on top of your finances.
2. Organise your finances
Following on from the first tip, document and organise your finances. Prepare a finance report – it can be as minimal as one or two pages long – showing all the key financial data.
The report should include:
- Balance sheet: An overall financial snapshot of your small business
- An income statement: This enables you to project sales and expenses over a set period.
- Cashflow statement: How much money is coming in to your business vs going out?
3. Know your options
Many small businesses are at a point where the demand for expansion exists, but they just do not have the necessary finances. Fortunately, the growth of specialist online lenders such as Prospa have given small-business owners and tradies more options than ever before.
Tea supplier Truly Tea expanded dramatically thanks to the help of such finance. Funds provided by Prospa enabled owner, Nyoli Scobie, to take on bigger contracts without having to worry about when she would be paid.
Nyloi used the funds to secure a contract with the Sydney Opera House, and signed an export deal to Korea and Vietnam on the back of her expansion.
4. Create a detailed expansion plan
With funding in place, you should be able to create a detailed expansion plan outlining exactly how your business will grow.
Create a loose timeline of events that will outline when you plan to hire new staff, upgrade equipment or relaunch your branding. Be sure to allow for some wiggle room here as contractors can abruptly cancel and supplies can delay without notice.
Expanding your business is a big deal. Yet by organising your finances and doing the research, obtaining funding can be a smooth and simple process, helping your business grow even faster.Want to grow your small business in 2017? Talk to Prospa about a business loan tailor-made for small business owners.
Brought to you by Anna Fitzgerald, Prospa