January 9, 2015
Growing your business is a great step for your business, but growth rarely occurs for free. If one of your new year’s business goals is to grow your business then you need to determine how much capital is going to be needed to pull that off and where that capital is coming from.
I’ve found that being undercapitalized is often the biggest impediment to successful growth in companies small and large. It’s not uncommon for entrepreneurs to put on their rose-colored glasses when estimating how much a new project or new product launch will cost and then struggle to wonder why everything didn’t go according to plan. So if you’ve got growth in your sites this year make sure that you’ve taken into account all the expenses related with the growth your projecting. Want to sell more product? Have you determined how much more you can expect to spend on ingredients, labor, kitchen costs, marketing, packaging, etc? If 2015 is the year you’re ready to open up a retail storefront then have you accounted for your electrical, garbage disposal, and the general ‘keeping the lights on’ cost such as making sure you have staff during all times the retail establishment is open.
Once you have a solid estimate of how much this growth will cost you, have you determined where the money is coming from to fund it? If you don’t already have that capital in your business’ bank account then are you going to personally fund the growth? Are you going to look elsewhere for partners or investors? Are you going to think about a crowd funding campaign? Or do you anticipate, based on historical sales, that the money will come in at some point this year.
Growing your business is a great goal to have – just make sure you’re preparing financially, as well as mentally, for it!