Make an educated decision if, when, and how to scale your business by researching the state of the industry, understanding where your business is now, and determining what you’ll need to grow.

By FINSYNC

“Is it time to take it to the next level?” is one of the most exciting (and potentially anxiety-inducing) questions a small business owner can ask themselves. However, with the right research, analysis and support, you can put together a measured plan for success. 

The answer to the question of whether or not your business is ready to scale is in the data. But where is that data?

Do the Research

The first step to such a big decision is research. Look into the overall industry landscape: 

  • How quickly is your industry growing? 
  • When and how do other businesses your size generally scale?
  • What are your competitors doing?

Research will reveal possible growth trajectories for your company. If your business serves local customers, look into other similar businesses in your city, and in similar sized markets. If your business is internet based, start with your industry. Then branch out to similar business models in other industries for ideas. 

When you start asking questions, sometimes you end up with more questions. That’s a good thing! New questions help clarify what information is most important. Allowing you to drill down into more granular and industry-specific information. Even if you ultimately decide to hold off on scaling for now, this research will help strengthen your business in preparation for growth. 

Shore Up Your Financials

Take stock of your business’s financial health. First things first. With all business expenses accounted for, be sure that you have more money coming in than going out. Take a holistic look at your books to see what you can optimize cut back on an expense here, add some money to a successful marketing campaign there. 

For example, much of the software that businesses use is purchased through small monthly subscriptions. It’s easy to overlook some of them. It’s a good idea to list and audit all of your monthly software subscriptions to determine if you actually need all of them.

For a clear picture of when and where all your money is coming in and going out, it helps to have everything together in an easy-to-read, intuitive dashboard. This type of tool will make it simple to get visibility on past, present, and projected income and expenses, all in one place. You can see summary data at a glance, or drill down into the nitty gritty details to understand your business’s financial data in detail. 

Growth is expensive. New inventory costs, rented space, higher payroll, and unforeseen changes all drive up the cost of scaling your business. Be sure that your finances are currently strong, but also that there’s enough money in the bank to cover the new costs associated with scaling.

In addition to the potential influx of new operating expenses, small businesses seeking bank financing to grow should be able to show at least three consecutive months of profitable operations. Many expansions will require outside financing, so shoring up your finances has the dual purpose of strengthening your cash flow and setting the company up to qualify for funding. 

Access Capital

It costs money to grow, and securing financing for small businesses is notoriously difficult. The good news is there are more opportunities to access capital than ever. 

While traditional lenders often require 2+ years of financial records and collateral, and generally tend to favor larger loan requests, alternative lenders approve loans with as little as 90 days of financial information. Alternative lenders are also able to approve smaller loan amounts, and are less likely to require collateral. 

With one simple application, FINSYNC’s Lending Network can connect small business owners with fast, flexible, and affordable financing from alternative lenders. Once you complete the application, you can compare loan options and even receive feedback to improve the strength of your application over time.

Beyond a traditional small business term loan, there are several types of loans that may be more accessible to small businesses, and are designed to support growth:  

  • Equipment Loan

If expansion requires new equipment, consider an equipment loan. The collateral is the equipment itself, so this is an attractive option for businesses not looking to put up other collateral to access financing. 

 

  • Invoice Financing

Invoice financing or “factoring” is another option with essentially built-in collateral. If your business invoices clients, you can receive cash advances based on the money you’ve invoiced. This can be especially helpful for businesses with long payment cycles. 

  • Line of Credit

Short of receiving a full loan, small businesses can also access a line of business credit to help support expansion. Also known as revolving credit. This type of loan doesn’t require collateral. It offers you flexibility in both how you use the funds and how you repay them. A line of credit can also help you build your business credit, which will make accessing capital in the future easier.

Build Your Team

Is your team ready for expansion? Take stock of who is currently on staff, where the team’s strengths lie and what support each team needs. First, evaluate how employees are currently performing, and then look at what additional capacity will be necessary for growth. 

For example, when opening a new location, not only will a small business need additional staff, but preferably some key managers with experience in opening new locations. 

When evaluating what your business will require in order to scale, it can be helpful to bring in expert support for strategic insight. For some help from someone who “has been there and done that,” FINSYNC’s corporate strategist consultants can provide you with specific experience scaling businesses in your industry without the commitment of making a full-time hire. No long-term contracts are required. Your business can benefit from executive-level expertise and guidance without committing to paying an executive salary. 

Even if you decide not to scale at this time, your business will be stronger for the groundwork you do to research the landscape, clean up your books, evaluate your team, and look into financing opportunities. 

If you’ve gone through these steps, and determine that it is time to take the leap, you can move forward with the confidence that you’ve done your due diligence and have access to the tools and expert support that your small business needs to scale.