Does a Business Expansion Make Financial Sense?

Does a Business Expansion Make Financial Sense?

There comes a point when you will consider whether or not it’s a lucrative move to expand your business. Expanding a business can be a smart choice, however, the key question is how will you finance an expansion? Growing your business will take a great deal of working capital that you may not see a positive return on right away. You’re not only going to need funds for the new location, but for additional employees, inventory, and the cost of operating an additional location. If you’re considering expanding your business, there are some key questions you need to ask yourself.

Is it too much too soon?

As a business owner, you naturally have big dreams for your business with goals to expand. Often, this dream causes business owners to bite off more than they can chew. It’s not uncommon for startups to want to expand, but they aren’t really ready. As a result, the expansion leads to the eventual downturn of the business. If you’re planning on expanding, you need to carefully evaluate the success of your business, not just in recent months, but look back at the success of your business over the last several years.

How is the current lending landscape?

Lending can change like the wind. At times, some lenders will be more willing to fund business expansions, while at other times, there may be higher interest rates and getting an approval can be a challenge. Prior to planning an expansion, you need to fully understand the current lending landscape to see if you are able to get the funds you need with decent payment terms.

Do I have a solid plan?

While you may have been successfully running one location, expanding to a new location is going to bring on a whole new set of challenges. You need a solid plan in place to ensure your new location will thrive. Just as with your first, create an individual business plan for each location, as well as a budget for advertising and additional costs.

Expanding your business can be a very smart business move if the time is right. Business Loans Direct is here to help your business expand by offering the funds you need for growth. Contact Business Loans Direct today to learn how we can help you grow your business.

Alyssa Ast

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