When you first started to attract investors as a startup you might have been full of figures that charted your proposed growth in the first few years. As you’ve worked hard, you might already be reaping some of the fruits of your labor. So now you’re facing new challenges. Expanding can be risky, especially for a business that isn’t deemed to be established. So what are your options?
How Did You Get Here?
Take a hard look at the figures before you decide to do anything. Where are the extra sales coming from? How does your current business compare to the proposed ones in those early proposals? The only way your business can continue to enjoy this high level of success is if you truly understand why it has occurred. This should inform you so that you can identify what might threaten its continuation.
What More Do You Need?
Expansion requires investment, so chances are you need to go back to your original stakeholders and see if any more is available. You might need additional machinery and equipment storage that is practically situated either onsite or nearby. Your business may also need more people power. You could outsource this at first while you test your new business models, but just the cost of recruiting may tip you over. Where will you find these funds?
Research
Your current cash flow might provide many of the answers here. If you’re able to fulfill current orders, then expansion may not be necessary immediately. Instead, it is something you should plan to implement in the near future. This gives you time to prepare. Your income can be saved to cover many of these future costs. The more you have in the bank, the more attractive you’ll look to new investors.
Plan
As part of your plan for expansion, you must have clear goals or objectives. Your current surge in success might be down to marketing campaigns or environmental factors that are no longer relevant. You can’t use them again so how can you be sure a new campaign will drive as many sales? You can’t be. But if you drill into the data you’ve collected so far, you might be able to forecast from your metrics. This could help feed your proposal for purchases and investment of more equipment, premises, and people.
Prepare
Most business owners fear the slump that can often appear after a boom. Slumps or slow-downs happen often. Most industries see sales cycle, with several peaks and troughs. As a startup, you won’t yet have the data sets to help you accurately predict cause and effect of these slumps on your business. You might be able to purchase data to help you here. Timing is crucial – you don’t want to nosedive into your quiet period just as an investor becomes interested.
Expansion affects the space you occupy as much as the cash invested. If your current premises isn’t appropriate for the long term, consider your options. Temporary accommodation may be best until you are better established. Some of your investors may be able to help you out if you’re willing to operate as a multi-site venture. Research your options before making the big spend.