The First Thing You Have to Do for an Expansion

by Kristopher Samuels Writer

Business is good. You can see proof that your operation is running smoothly when you go through the bookkeeping records. You’ve noticed that you always have a long line of customers in front of the cash register. The store isn’t empty until one of your staffers turns the Closed sign over and politely ushers the last stragglers out the door.

These signs of business success are pointing you towards the next big step: expansion. You can open up a second location in a different neighborhood to reach a new set of customers and popularize your brand. If you think you’re finally ready to expand and grow your business in the near future, the first thing that you need to do is get a considerable amount of funding.

Why Do You Need Funding?

One of the biggest mistakes that owners make when they’re attempting to scale a business is underestimating how much the entire process will cost them. You don’t want to run out of money halfway through the expansion. It could lead to some severe financial problems, and it could sabotage the success of your second location. Don’t set yourself up for failure by ignoring the funding.

Covering All of Your Essentials

You’re starting from square one all over again. You’re going to have to find an affordable storefront to rent, decorate it to match the brand of the first location, and then fill it with products to sell. Gathering all of the essentials for your new place will add up quickly. Think about all of the payments you will have to make:

Rent
Renovations and Repairs
Décor
Utilities
Stocking Inventory
Basic Supplies
Payroll
Insurance
Taxes

Getting Through Growing Pains

Another serious mistake that owners make during expansion is that they set cash flow projections that are way too high. So, when they open up the new store, they’re shocked that they’re not bringing in enough profits to meet those projections and then struggle to keep up with payments.

You have to remember that your location will be brand-new. It will not have an established customer base, so it will not make the same amount of sales as your first location. You’re treading water right now. In time, your store will get established in the neighborhood and attract regulars, and the profits will climb. In the meantime, use your funding as a financial cushion whenever the store’s cash flow needs a little boost.

Where Do You Get Funding?

The average small business owner won’t have enough cash reserves set aside to cover the costs of a second location. You’re probably going to have to apply for funding. You could go the traditional route and go to the bank for business funding, but they are notoriously picky about the operations that they support. So, you might leave the building with little or no funding at all.

You’re better off looking at alternative funding options. The qualifications are not as stringent for owners, meaning you’re not as likely to get your plans rejected. And their funding process is simple and fast. You’ll have access to the money you need within days.