All small business owners recognize the need to grow their businesses profitably. Unfortunately, many of those same owners don’t properly plan for that desired growth. They are so close to the situation that they fail to consider all variables and forget to ask the right questions.
Objectivity is key. Because it is often difficult to remain objective on our own, we need to turn to trusted, objective individuals who will challenge our decision-making process and stretch our ideas.
When small business owners start thinking about expansion, whom should they turn to for objective consultation, advice or general brainstorming? Whether considering an additional investment in the company, diversification of business lines or a small acquisition, business owners need to be able to discuss their ideas with someone who has experience in similar situations.
Consider talking to your local banker. After all, business bankers see more transactions come across their desk than any other individual. A good business banker has worked with many companies that have considered expansion, and (hopefully) actually assisted a large number of those in expanding their operations.
Assessing Your Current Condition
An experienced business banker knows what to look for in financials, planning and timing, and knows the challenging strategy questions to ask before an owner makes a final decision.
Because of this knowledge and intuition, companies whose loan requests the banker couldn’t approve after the first or second conversation are often successful on the third or fourth conversation, after applying the banker’s advice. (That’s why it’s a good idea to engage your banker early in the process.)
An experienced business banker should start by helping you determine the financial strength of your current business operations. Many times these functions can be performed by a loan officer, a private banker or a business adviser affiliated with the bank. These people should have experience analyzing financial statements for companies of all sizes and in all stages of the company life cycle.
If your business is on less-than-solid financial footing, then the timing may not be right for expansion. However, you should know why the footing is crumbling and, more importantly, have a plan to fix it.
Getting Specific About Your Plans
Expansion does not just happen, but is the result of a good idea being put into action after the development of a solid implementation plan. The plan needs to include what is going to be done, the cost of doing it, how it will be completed (including how it will be financed), the desired timeframe and a cash flow plan that supports the implementation.
Getting someone to unbiasedly assess your financial statements and business plan is an essential first step before taking any other actions. Who better to help an owner put the proper plan in place than the person ultimately making the critical financing decision to support that effort?
When considering any type of expansion or additional investment in the business, every detail of the plan needs to be carefully considered well in advance of the implementation. If not, you may spend a great amount of time, money and resources crafting an emotionally charged expansion plan that, in the worst case scenario, puts the entire business at risk.
There is a seemingly infinite list of consultants, experts and resources available to small business owners today, all offering to help strategize the growth of your company. The key is to find someone who is knowledgeable, objective and that you trust has your best interest in mind. If you are thinking about expanding your business, give your business bankers a shot—you just might be surprised at how much they can help beyond your immediate banking needs.
