Business Banking

Avoiding The Pitfalls Of Growth

Most businesses outgrow their facilities at some point. Having to expand signals success and is generally a good thing. But it can come with big changes and requires careful planning to ensure that core goals are met, and unnecessary costs and complications are avoided.

Before the blueprints are drawn for any expansion, it’s critical to fully understand the project’s goals. For many businesses, the answer may seem obvious. Existing facilities are not adequate to meet current demand and you need to enhance your site accordingly. But this may be shortsighted. In many cases, adjusting planning for longer-term growth may ultimately save money and prevent additional ad hoc expansions down the road. Therefore, any expansion plan should start with a review of your company’s broader strategy and future growth projections, and end with a detailed project plan that is closely aligned with both.

There are many important decisions to be made with any expansion strategy. These include the fundamentals, such as whether it’s better to rent, buy, build new, or acquire additional real estate (and, if so, where). But secondary issues are also important to keep in mind, such as staffing for an expanded facility, getting the required planning and building permissions, and making sure that supply chains and marketing strategies are suitable for any new locations. You also may want to take the opportunity to plan for a more sustainable facility, particularly if you are in manufacturing.

Once goals are set, you need a realistic assessment of the available resources to achieve them. How will you fund the expansion, and will outside sources be needed? You will need cost estimates based on initial project plans to formulate a budget, allowing for “wiggle room” to account for unforeseen disruptions and delays. Keep in mind that if you’re expanding out of state you will likely need to pay taxes in your new state as well as your home state.

Expansion can be challenging, and there are likely to be issues to address during the process, so it’s important to stay positive, remain focused, and stick to your plan. The rewards in the growth and profitability of your business can be substantial.

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