The small business life is very cutthroat. You are constantly watching the market for innovation opportunities, monitoring your competition, and planning out your finances. And as nerve-wracking it is, it is also an exciting life, as you conquer the challenges set before you and grow your company to be bigger and better.
However, there comes a time in the life of most small businesses where a decision must be made: are we investing in going larger scale or are we not ready yet?
Leaping forward can be scary and doesn’t end well for everyone, but you can equally suffocate your business by keeping it limited by your scale and production, or service capacity. Though it’s inevitably a risk (as is having a small business in the first place), there are things that you can do to minimize it and the likelihood that you will not be able to recover if things don’t go as planned.
If you know that you want to take the next step and build your company, whether that means hiring a bigger team, buying equipment, or getting a new space to accommodate for your growing needs, you will likely need some money. Set aside money from your company’s profits to help ease that transition for you. It’s also good to have backup money in case things don’t go as planned to help your company to carry on as usual, without disrupting service for clients. Even if it is in the form of a loan, knowing that you can access money at a moment’s notice will give you confidence to try new things.
Budget in Some Cost Savings
It’s one thing to have money to work with, but it’s another to find room in your budget to save on these costs in order to minimize the amount that you will need to save or borrow in the first place. Save money with used industrial equipment, consider transitioning to a co-working space, renting before buying, or finding a way to keep the growth of your monthly costs as gradual as possible. Sometimes it takes a leap, but sometimes there’s a way to get more value without spending quite as much.
Many companies have been turning to crowdsourcing pages like Indigogo or Kickstarter to get their ideas off the ground. Sometimes it just about seeing that the interest is there and getting some pre-orders in to prove your concept. This also takes much of the risk out as you are getting the money upfront which you don’t have to give back with interest. Most of the time a small perk and the product are enough to incentivize your audience to pledge money. Keep in mind though that you will have to invest into some marketing to get your micro-investors interested in your product/service and want to be a part of your success story.
This sounds like a big, serious step and it is. But it’s also a very common one so you would not be the first one in this ring. Investors will not just give you money to work with, they often add value with their experience and counsel. Research your potential investors well and see what they can contribute apart from money, whether that’s networking, a publicity opportunity or industry connections that will allow you to score better contracts.
Taking your small business from a one-person operation to something more significant is an exciting but risky time. But remember, there is little to gain without risk and sometimes you need to cover your bases to allow you to bounce back in case you fall.