Businesses that cut inventories and staff to stay afloat during the recession may now see the light at the end of the tunnel. Sales for some have begun to edge upward. The question is, after years of playing defense, are these businesses prepared to switch gears and pursue expansion opportunities?
Jumpstarting growth in a business that’s been operating in maintenance mode takes planning, as well as increased amounts of working capital. Here are six things you can do now to prepare:
- Consider refinancing your existing debt. With interest rates at historic lows, every property owner should evaluate his or her current real estate loans to determine if refinancing existing debt at potentially lower rates makes good business sense. Refinancing is a relatively simple way to improve cash flow, which you will likely need to help fund your growth.
- Ensure access to working capital. To make expansion possible, business owners must often rebuild inventory, carry large accounts receivable levels and possibly add equipment, products and staff. Having an adequate line of credit to manage the volatility of your cash position is imperative to ensuring you have the availability of cash to manage your daily operations.
- Determine if your products and services are positioned appropriately. Review your customer base and prospective target market. Evaluate the competitive landscape, and ask yourself whether there are opportunities. Also, consider whether your geographic market for your product/service still makes sense. Once you have gathered research in these areas, evaluate the pricing of your products or services.
- Update your business plan. After a period of stagnation, most business people are itching to pursue new opportunities. But some can be sidetracked by having too many choices and too few criteria by which to evaluate them. To stay focused, you'll want a concrete business plan that maps out where you want your business to go and how you intend to get there. Proactive planning will put you in the driver's seat, giving you the tools you need to base go/no-go decisions on your defined business goals and objectives.
- Make sure your personal finances are in order. A small business' finances are only as good as those of its owners. If you will be seeking financing to help fund your expansion, you'll want to review your personal finances to ensure your personal credit score is both accurate and strong enough to increase your company’s potential increase in debt. Other personal finance strategies include building your savings, paying down debt and taking other steps to make you a stronger candidate for a business loan.
- Explore your financing options. Business owners who were hunkered down in the trenches during the recession may be surprised to learn how much the lending landscape has changed since they last sought financing. Lenders that might have once seemed out of reach may be able to commit to a loan more quickly and at a lower rate than you might expect. The only way to find out is to talk to your banker about your business plan and their willingness to help.
The time to do all this is sooner, rather than later. Even if you think your company's return to "business as usual" is still months down the road, the time to start preparing is now. iBi