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What You Need to Know Before you Expand Your Small Business

If you own a small business, it can be tempting to want to expand. After all, with expansion comes more staff – meaning less work for you – and potentially higher profits. If you have a family, it can also mean you have more time and energy to spend with them.

However, although expansion is tempting, it can be disastrous if you do not have the right plan in place first.

Here is what you need to know before you expand your small business:

Make sure your paperwork and insurance cover are in place

Before you expand your small business, you need to have the basics in place. Getting your paperwork in order is vital, because your admin can quickly spiral out of control with the added strain of more staff and (hopefully) more customers.

For example, if you have a company car that you or your employees use, you need to make sure you have suitable commercial auto insurance. Without it, you and your business are left exposed to large accident claims, medical bills, as well as vehicle and property damage.

On top of this, if your company car gets damaged and you cannot use it, it could cause a massive inconvenience to your business as you struggle to find alternative modes of transport.

This issue will only get worse the larger your business becomes, so get your business auto insurance policy to safeguard yourself from any future financial problems.

Do not take on more of a workload than you can handle

Expansion does not necessarily mean taking on more staff. In fact, it is often tempting to take on more clients without increasing your number of staff, so that you can take more of the profits and remain fully in control of your product or service.

If you can handle this, then fantastic – but if you overstretch, it could decrease the value of your service, cause delays and cause you a great deal of stress.

You should remember the point of expanding – to delegate work to others and to begin to step back from the day-to-day running of your business. While it is natural to work more when you initially expand, you should have a clear strategy in place to make the growth manageable.

Simply working harder until you burn out is not a sustainable option.

Reflect on why you are choosing to expand

If you want to expand your business, have a clear reason why. Although expanding your small business could lead to more profits, those profits will likely be spent on producing your product or services, staff costs and taxes. As a result, you need to have a clear target in mind, rather than simply more money, because you will never know when you have reached the right level.

Many small businesses make this mistake and end up ruining the very product and service they were renowned for. Therefore, unless you have a justifiable reason to expand, it is often better to keep life simple and stay the same size.

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