Is It Time to Expand Your Business? Get Objective Guidance from a CPA

It is the goal of every small business to grow and expand, but how do you know when the time is right?

If you’re an entrepreneur in Nashville, working with a CPA can help you better recognize the signs that you should start taking your business to the next level. This is especially true if your CPA has been working with you from the start and has guided you through the various phases of your entrepreneurial journey.

On your own, however, you can also assess the situation and consider if it’s the right time to have an expansion. You can then consult your accountant to get professional guidance.

While there’s no one-size-fits-all answer to when a business expansion should be undertaken, in general, these signs will point you toward that direction:

1. You have a substantial number of regular customers

Having a steady customer base is a good indication that there is demand for your business. It tells you that people like your products or services and are satisfied with the quality. A good retention rate is very important to a business’s success, so make sure to keep your loyal customers happy while you attract new ones.

2. Your customers ask for it

Some customers may be asking for certain products that are related to what you’re currently selling. Or they may ask for another location that’s more accessible for them. Expanding your business can help you serve your customers better and give more people easier access to your products or services. Do your research to determine if a new product or location is viable and if you can attract more customers with an expansion.

3. Your space is getting too small

If you need more room to keep your operations running smoothly, then perhaps it’s time to have a physical expansion. But before adding real estate or leasing a bigger, more expensive place, ask yourself if you really need it. Is the lack of capacity due to consistent growth or is it just a temporary, seasonal spike? Will the move translate into more and happier customers? Consider how much additional space you’ll need and set a budget for the initial costs and monthly rents. Be objective and do not get carried away by excitement.

4. Your business has grown beyond your current capacity

If you have to turn away customers or are working overly long hours, then you may need to hire more employees or expand your facilities — or both. This is the best reason for an expansion as it will help you meet the growing demands of your customers and increase your reach.

5. You have steady cash flow

Before embarking on expansion, it’s important to make sure you have a solid financial foundation. If you’re having cash flow problems, these might be compounded after you hire new employees or move to a larger space. Review your finances thoroughly and work on resolving the kinks before starting an expansion.

Keep in mind that it’s easy to make emotional decisions when it comes to your own business. To avoid costly mistakes, make sure you get objective professional guidance from your CPA.

Sources:

How to Expand Your Business: 10 Tips to Help Your Business Grow, Fundera.com
When and How to Expand Your Small Business, WECanMag.com