January 9, 2015

Planning To Grow In 2015? Do You Have The Cash To Pull It Off?

small business financialsGrowing 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!

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2 comments on “Planning To Grow In 2015? Do You Have The Cash To Pull It Off?

  • fatima musa on said:

    Jenni hi.ma great pleasure having you as mentor. i run a culinary school and have been in debt because my students pay twice which causes the business to lag. what can i do differently this year 2015.

    • Jennifer on said:

      I’m not 100% sure what you mean by students paying twice unless you mean that when they’re paying doesn’t line up with when you incur the expenses. A few things to think about would be changing the payment timing and type for your students or offering them an incentive to pay more upfront. Outside of that, you also need to make sure that your costs are covered by the prices you’re charging and, if not, you may need to change your pricing structure. Lastly, are your classes full or are some more popular than others? If you aren’t always selling out then take a look at the courses that are the most popular and try to figure out 1. are those classes profitable (if not, that’s the first problem you have to solve) and then 2. what makes those classes more popular and what can you do to change your course selection so that you can offer more classes that have a higher percentage of selling out. I hope that helps and good luck!