5 Handy Tips That Aspiring Entrepreneurs Should Keep In Mind to Scale Up Their Business
Updated: Feb 3, 2020
Now that you have successfully managed to establish your new business in the market, it is about time that you start thinking about expanding your operations in order to take your profit margins to the next level. Before you take that big leap, you need to take a look at some important points to make sure you are going in the right direction. This article will shed some light on some invaluable tips and will show you how to predict realistic growth and foresee potential challenges before they hamper your growth.
1. Negotiate Wisely
If you are relying on your investors to finance your upcoming expansion, you need to make sure to approach the negotiation table with prudence. Learning the "Art of Saying No" can go a long way in making you a good negotiator and pulling a good deal.
Do not accede blindly to an investor's request; you should evaluate the needs of the business against the objectives of the investor before making any decision. Once you are able to have a clear understanding of the investor's goals, you will be in a better position to make some compromises while still keeping those business principles contact which have brought you success thus far.
Last but not the least, always show respect and carefully listen to the other party in all negotiations. Try to focus on points of mutual interest rather than pushing your agenda, this can result in a positive and productive union.
2. Keep A Close Eye On The "Nitty Gritty" Things
Although those minor expenses may not seem threatening during the initial phase, but once they start to accumulate, you can find yourself struggling with clearing those hefty bills.
Therefore, never ignore those minor expenses and keep a close eye on petty cash expenditures, unpaid fees, late invoices, and staff expense claims.
In order to keep those little expenses in check and stop them from piling up, you need to maintain a rational outlook and learn positive lessons from your experience. Keeping track of the trigger points and resulting outlays can help you avoid those repeated occurrences.
3. Plan Your Finances Wisely
Besides keeping a check on the "smaller" business expenses, you also need to maintain a firm grip on your overall business finances. You need to keep a close watch on the comings and goings in your books. This will help you make a better assessment of the type and amount of investments you will require to take your business to the next level.
According to Martin Senn, CEO of Davinci Virtual Solutions, "it is better to bootstrap (self-fund) your business for as long as possible". He further explains that those early venture capital or angel investments can prove to be distracting for someone who is doing the business for the first time, as most of the inexperienced businesses tend to give up equity at lower valuations than later when the business matures.
Rather than following your emotional desires, you should carefully evaluate your business needs first before making any investment decisions.
4. Understand The Basics Of Taxes
As you take your business to the next level, you also need to understand that you will now be faced with some new taxes. You may have successfully handled the myriad of tax-related regularity requirements for your small business, but when you expand your business to the corporate level, you will likely face many new sets of taxation requirements. Under such circumstances, it is always a good idea to engage the services of a professional tax advisor who is familiar with all the tax policies pertaining to companies of similar stature.
If you thinking about international expansion, you need to learn about the prevailing tax regulations and laws in the countries of your interest. So before starting your business in a foreign land, rope in a trusted local partner or perform some income tax related research to make sure your expansion efforts do not go to waste.
5. Streamline Your Recruiting And Training Efforts
With the expansion of your business, you will almost certainly require increasing the number of headcounts as well. Since you are already running on a tight budget, finding and adding experienced and talented employees to your company's payroll who are willing to offer their services at lower rates may pose a serious challenge. In order to deal with this challenge, most of the companies in their expansion phase resort on hiring inexperienced workforce just to get more "hands on the deck".
According to Tim Soulo, Head of Marketing at Ahrefs, "you may have to spend a bit of time to teach these inexperienced employees all the things that you need them to perform, so the sooner you are able to hire them and give them proper training, the sooner they will be able to perform your desired tasks". This idea is clearly depicted in an old Chinese proverb, "the best time to plant a tree was 20 years ago, the second best time is now".
If somehow you are able to anticipate and manage potential pitfalls ahead of time, your next business expansion effort may prove to be a lucrative endeavor. By following the tips listed above, you may be able to better evaluate your options and prepare yourself for the challenges that may arise in the future. This is the only way you are going to enjoy greater returns and increased likelihood of success.