Best Practices for How and When to Expand Your Business

Planning a business expansion means covering a lot of bases at once. You need to make sure you can keep operations going while you grow, you’ve got to have the infrastructure to make the growth sustainable, and you need to understand when to time your expansion in your business cycle for maximum impact on your sales and minimal disruption to your business cycle. This means following a few basic best practices.

To get started, do your research and identify when your business is cyclically ready to change operations. It’s also helpful to get a feel for the real estate market in your area if your expansion will involve the purchase or construction of new facilities. Each business expansion is different, though—you might be expanding existing structures on your property, in which case your research should focus less on real estate and more on the seasonal availability and cost of your construction contractors. Either way, you’ll want to plan the expansion well in advance so you can time it optimally.

You also need to be sure you have enough funding to cover the expansion’s needs without disrupting your regular business cycle. This means you’ll need a cash flow plan that accurately charts out a budget for your operations. Be sure to include the cost of supplies, overhead like energy and facilities costs, and even your labor. That way, you can estimate what portion of your income and reserves can be dedicated to funding your business expansion. Once you know how much money you can afford out of your reserves and monthly income, you can better estimate your needs for financing.

Understanding your financing needs means understanding both the available loans and alternative financing structures that can be used for your expansion. For example, a manufacturing business looking to add a new department to fabricate new parts for customers might be best served by SBA loans, whereas a food and entertainment business could find its expansion better served with asset financing that will allow for a fast renovation and short-term repayment. It’s all about what lets your individual business reach a return on investment faster, and that means you’ll need to have a plan for financing well in advance of beginning your expansion.

Following these best practices means going into your business expansion with the support and funding you need to be successful. You can’t rush a major move like this, so make sure you’re doing your research at each step to make the best choices for your company.


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