Profit Planning: Tips for Expanding Your Business
If your small business has been experiencing steady sales over multiple quarters and you have many happy customers it may be time to think about expansion opportunities such as:
- Opening a new location or renovating your current location
- Offering your business as franchise opportunity to outsiders
- Diversifying your product or service offering
- Opening an online store to sell your products nationally
- Adding a bar or patio
Before you dive in head first and start investing in an expansion project, it’s important to first work on a profit plan to ensure your project leads to growth. You don’t want to put money into expansion only to find out later that it was a bad idea.
Your profit plan will set out your strategies for both short and long term growth. Such strategies will cover: pricing, marketing, facilities and personnel. By creating a thorough profit plan you will prepare for the costs associated with your expansion.
Creating your Profit Plan
- To create a profit plan you first need to gather accurate data showing your current financial state. Compare sales vs costs to see if there are any areas you should fix now before you start expanding.
- Consider how expansion will impact your current employees. Will a big increase in sales overload your staff? If so, you’ll need to budget money to hire new employees as your expansion project takes flight.
- Talk to your suppliers and tell them that you are planning to expand. Make sure that they can handle the additional purchasing requirements in a timely manner – and be sure to inquire about any bulk discounts you may be eligible for as you move forward.
- Ask yourself where you will store your new volume of inventory. Will you need to invest in a larger facility? Will you open a second location? Note down these associated costs.
- How will you finance the expansion of your small business without hurting your cash flow? Consider all of your options from bank loans to alternative lending options like short-term working capital loans.
Creating a profit plan is an important step because it allows you to be cost conscious when planning for your expansion. Once you have a good idea of what your expenditures and upfront fees will be, you’ll be able to forecast your future profits more accurately.
If you’re beginning to get cold feet about expanding because of the upfront costs you are not alone. This is a major obstacle for most small business owners, but it doesn’t have to be a complete roadblock.
By obtaining a short-term Working Capital Loan you can finance the expansion of your company without hurting your cash flow or digging into your personal bank account. Here at ARF Financial we work with a network of FDIC insured community banks to help small business owners obtain working capital loans.
Here are a few stories from business owners we’ve recently worked with:
A business owner was looking for a large sum of capital for a remodeling and expansion project. The cash advance companies he contacted could not offer the total amount needed. They would only base the advance on his credit card sales, not his total sales. ARF Financial was able to help him obtain a $125,000 loan with an 18-month term. Obtaining the entire loan amount at a longer term allowed the business owner to finish his project without hurting cash flow.
Another business owner needed $75K to conduct renovations after-hours. After receiving a working capital loan through ARF Financial she was able to complete her renovations in under a month. Those renovations helped her increase sales by over $900,000 in just one year!
A third restaurant owner was losing business due to long wait times. To fix this he needed to quickly add a bar area and secure a 3-way liquor license. ARF Financial was able to help the restaurant owner obtain the financing he needed within a few business days of receiving the loan application. Soon after the restuarant was featured on Diners, Drive-Ins and Dives!
Obtaining a Working Capital Loan to Finance Your Expansion
If you’re ready to speak with a business consultant about obtaining a working capital loan to finance your expansion, please contact ARF Financial today. When you obtain a business loan through our network, you enjoy the following benefits:
- Flexible terms up to 18 months
- Approvals granted within days
- Affordable fixed payments and interest rates
- Interest is tax deductible
Use our free loan calculator today to see how much you qualify for!