In the modern business world, expansion can come at a hefty price. The competitive marketplace, the demanding customers, the need to bring in top talent in the industry all the while preserving a positive cash flow and making sure you get paid for your services, all of this and more can put a lot of pressure your business might not be prepared to handle. After all, out of all the common entrepreneurial pitfalls, the majority of small businesses fail because of poor financial management.
Expanding your company requires not only meticulous planning and timely execution, but you should also know exactly when the time is right to effectuate your expansion strategy. It might mean the difference between maintaining a steady upward trajectory, and having to take two steps back. Here is when and how to expand your small business.
Increase Your Retention Rate
Expansion in the business world is often associated with getting more customers and boosting traffic to your online and offline stores or offices. While that is true to an extent, a wise entrepreneur will always tell you that you should never rely on your new customers to become your recurring clientele. In fact, the majority of your efforts will and should revolve around recurring business, and boosting your customer retention rate.
This is your main source of income, the customers and clients that keep coming back to renew their contracts or make a new purchase month after month. Always remember that it’s easier and more cost-effective to nurture your existing clientele and incentivize them to keep coming back than to spend resources attracting new potential customers and converting them into paying, loyal brand followers.
You Have Needs for New Talent
One of the main tell-tale signs that your company is about ready to expand is when you have to deal with increased workloads on a regular basis and your existing team is already maxed-out on duties. Having no one to take over the new clients or customers and being already spread thin as it is should tell you that you should make room in the office for a new colleague or maybe even an entire team.
Now, it’s not like hiring new employees is a pain-free process, especially for your budget and cash flow, so think of it as a long-term investment. You will have to direct cash towards bringing in new people and meeting your new payroll expenses, but all of it should run smoothly if you tend to meticulous cash flow management first.
Ensure Constant Cash Flow
Truth be told, maintaining cash flow quarter after quarter is not an easy task, no matter how much your products or services might be in demand. The volatility of the market coupled with the ever-changing trends that permeate the industry can make it all-to-easy to lose business very quickly if you’re not careful. One of the biggest problems for business leaders is dealing with outstanding payments and collecting on their monthly invoices.
By no means should you try to force your clients into paying, as you want to preserve positive relationships, which is why you might want to turn to debtor finance in order to maintain your cash flow, expand safely, and remain on good terms with your clientele. Not only can debtor finance get you out of a bad financial spot, but it will also help you preserve the reputation of an easy-to-work with company in the long run.
Focus on Innovation and Diversification
A business can only grow so much in the ever-changing marketplace without having to introduce new products and services to keep its audiences and customers interested and satisfied, not to mention the need to bring in new business over time. This is why a vital part of your growth strategy should be to invest in product diversification, but also to invest in innovation.
Innovation is the driving force behind successful business ventures and it is the key differentiating factor that will set you apart from the competition and attract new customers to your doorstep. You can enrich your product offering by copying other popular products in the market, yes, but if you want to ensure long-term success, you will not forget about the importance of innovation.
Maintain Your Current Price Tags
Nobody said that investing in the growth of your business would be easy on your wallet, and while you might feel tempted to raise your prices just a bit in order to cover up your expenses more efficiently, it wouldn’t be a very prudent business decision – not if you’re playing the long game. The key is to grow your company without the clients and customers feeling it on their wallets, so focus on managing cash flow efficiently and do your best to keep the price tags the same. In turn, this will boost customer loyalty and retention, and drive new business to your doorstep.
Expansion is, of course, every modern entrepreneur’s dream. It means more business, it means increased cash flow, and it means taking your company to new heights of success. In order to make this dream a reality, however, be sure to follow these essential steps to long-term prosperity in the business world.
About the Author
Lucas Bergman is a real estate agent and renewable energy consultant with many hobbies and passions, but above all, he enjoys the most spending time with his wife – Mara. He also likes Lord of the Rings. He, actually, very much likes Lord of the Rings. He is a regular contributor at smoothdecorator.com.