What to Consider When Expanding a Business

If you're a business owner, you want to expand operations at some point. Growing your business allows you to sell more of your product or service, so you can earn more money. However, you have to make sure that you're ready to scale up before you take the leap. For example, if you invest in growth but then there isn't increased demand for your products or services, you could lose money. Discover how to expand a business successfully below.

Consider the tax implications of expanding your business 

Expanding your business carries tax implications. If your profits increase, your tax burden will increase as well. Talk to a tax preparer like The Tax Loft about what this could mean for your annual obligations to the Internal Revenue Service. There are steps you can take to minimize your tax burden, such as changing business models. For example, the taxation processes and requirements differ for a limited liability company versus a corporation. Switching structures requires completing new registration paperwork and tax forms.

Make sure you have the money needed to expand

Growing a business generally requires some sort of financial investment. You'll have to get more inventory, for example, and you may need to hire more employees. Depending on the type of business you run, you may also need to move to a larger commercial space, which means higher rent. If you don't have the money to cover those costs yourself, a business expansion loan can help. Forbes explains the different types of expansion loans, including traditional bank loans, SBA loans, and business lines of credit.

Figure out what products or services to add

In some cases, expansion simply means selling more of a product or service you already offer. In other cases, you may want to add a new product or service line. To figure out what products or services to add, start by identifying a market need. You can do this by conducting market research and finding an unmet need. Next, identify your USP, unique selling proposition. This is what makes your new products or services stand out from others.

Invest in marketing to attract new customers

If you want to sell more products or services, you have to find more customers. Invest in low-cost marketing techniques to raise your business profile. Ideas include social media, email marketing, and cross-promotions. You can also ask existing customers to refer new customers. For example, if a customer refers a friend, you could reward them with a gift card. Use this gift card API to easily reward respondents for referrals. You can even personalize the rewards with your brand and custom messages.

Set up the logistics needed to expand

Be realistic about what practical steps you need to take to expand. For example, if you create your own products, you need to scale up manufacturing. If you want to store more inventory, you have to maximize warehouse storage space. Look for cost-efficient options at every step. For example, instead of renting a larger warehouse space, find ways to make the most of existing space. Similarly, instead of hiring more full-time staff, start with freelancers.

Hire the team you need to support your expansion

Your employees are what keep your business running. If you expand, you'll probably need to hire more people. You can start by hiring temp workers to keep costs low and then take people on full-time as your expansion finds success. Consider taking a values-based approach to hiring. Lucida explains that values-based hiring can help improve employee satisfaction and retention and explains how it's done.

Business expansion is a smart move. It allows you to boost your business profile, sell more, and earn more. However, you have to play it smart when growing a company, or you risk losing money. Follow the tips above to get started.

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Article by: Christopher Haymon