Editor's Note: I am pleased to have Amy Collett write today's guest blog. Amy specializes in doing personal branding, messaging, social media evaluation and writing. You may find out more about Amy's work at https://bizwell.org.
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After you’ve worked so hard to build a successful small business, the thought of expanding into something larger and more profitable is incredibly exciting. However, knowing when to expand a small business isn’t always clear — and there are several downsides to expanding too soon or too late. If you expand too early, for instance, you could run into financial difficulties. And if you wait too long to expand, you could miss your window of opportunity.
Before moving forward with your expansion, it’s important to revisit your business plan and consider several important points — including your budget and legal structure. Tim Snell of Business Builder Leadership Coaching discusses five points to consider in the sections below.
1. Budget
Expanding a small business doesn’t come cheap, especially if the expansion requires you to move into a larger office space, grow your team, pay employee benefits, and purchase and store additional business inventory. As such, it’s important to understand the various costs associated with growing a small business — and budget for these expansion-related expenses before moving forward. Michael Vanasselt of Seek Business Capital shares some budgeting tips for small business owners, so be sure to keep these in mind when planning your business expansion.
2. Liability Protection
If you’ve been operating your business as a sole proprietorship or partnership, you’ll also want to rethink your legal structure when expanding your small business. By upgrading to a limited liability company (LLC), for instance, you’ll protect yourself from personal liability, qualify for tax advantages (like pass-through taxation), and enjoy a hassle-free filing process.
Typically, registering an LLC is as simple as using an affordable online formation service, or manually filing the Articles of Organization with your state of residence. Filing requirements vary by state, however, so you’ll need to review your local regulations before moving forward. And if an LLC isn’t right for your business, a corporation may be a better option.
3. Business Coaching
If you’re still fairly new to leading and managing others, it’s a good idea to work with a certified systems leadership coach as you prepare to expand your small business. Tim Snell of Business Builder Leadership Coaching can help you improve your leadership skills through his small business coaching, business training, leadership coaching, and business consulting services for small business owners and nonprofit leaders. With Tim’s expert coaching and training services, you’ll become the leader your business needs to expand, grow, and increase profits now and in the future.
4. Office Space
To make space for your new employees, visitors, and any additional inventory you need to stock up on, expanding your small business may mean upgrading your office space. As such, you’ll need to compare the different types of office spaces to find the right option for you. According to Graham Shorr of SquareFoot, several commonly used spaces include traditional offices, contiguous spaces, and shared workspaces. Mashable, however, shares some tips for choosing the right office space for your specific business needs.
5. Employees
As your business expands, you’ll likely need to grow your team to keep up with the increased customer demand. However, you’ll need to decide whether to hire full-time employees or independent contractors — as there are pros and cons to each.
As one example, working with contractors typically costs less than hiring employees — but training and managing contractors can be more of a challenge in some cases. With employees, however, you’ll need to worry about paying an annual salary and offering benefits such as insurance, paid time off (PTO), and retirement savings plans.
The Bottom Line
Expanding a small business is a major decision that shouldn’t be taken lightly. As you revisit your business plan and prepare for your expansion, it’s important to keep these five considerations in mind to ensure that you’ll be making the best possible decision for yourself and the future of your small business.
Are you preparing to expand your small business? Sharpen your leadership and management skills with expert guidance from Tim Snell of Business Builder Leadership Coaching. Book your free Discovery Coaching Session online or contact Tim at 417-365-0727