Many entrepreneurs dream of developing their business to a point where they can add staff and other assets, relieve the pressure of doing everything, and focus on managing.
Then the point comes when just one more customer has arrived and it makes sense (perhaps) to take the next expansion step. Judging the time for this is difficult…not too soon and not too late. Following are considerations for operational/cost expansion as well as those for not.
It could be this is one of the most important times to seek outside consultation. Consultants can help you determine the proper growth strategy can save/earn you far more than their cost of consultation. These are a few such consultants:
Roger O’Brien has coached more than 300 entrepreneurs in strategic growth – the status quo isn’t enough anymore. Website
The Holly Company consults with businesses to develop expansion strategies and realistic financial projections, assisting with financing as needed. Holly Bradshaw Eakes Website
Action Coach uses globally proven strategies to help business owners build a stronger business model that results in increase revenues. Website
ASi/Q is expert in guiding businesses at all stages of the business lifecycle to increased profits and value through rapid development and implementation of healthy growth strategies. Website
JIT CFO is your Just In Time Chief Financial Officer assisting in Company Financial Optimization. Tammy McCarty Website
Having your long term plan in place before adding cost, the new building, the additional staff, or higher inventory levels is critical.
Entrepreneurs should have long-term plans in any case. Of course, from my business broker perspective, knowing when you are going to sell or when you hope to transition to a family member or inside buyer is important. As the beacon at the end of the entrepreneurial tunnel, the plan can guide your steps along the way.
If we make the assumption that entrepreneurs are investing in their business for both today’s income and as a piece of their retirement, it makes sense to increase the value of the business. If you want to retire in 10 years, what do you want or need the value to be in order to fund that retirement? How can you structure the business during that 10-year period to be at the target value? You might want to purchase another complimentary company to increase value, expand to new markets, add additional product lines, etc.
Without a specific plan, you could be in the situation of having added cost to an extent that the revenue will not catch up, thus reducing the value of the business. Or, the opportunity to add sufficient value is a longer-term effort than the term when you want to sell.
Strategy is important to meet specific goals in a timely fashion.