What are your plans for your business? Some parents start an enterprise purely to provide a little bit of extra income, but many have big plans. In this article from Antonia Chitty of Family Friendly Working you can learn more about growing your business, whether you started off knowing that you wanted a high growth enterprise, or the growth of your business has surprised you. Read on to find out some of the challenges you come across when you aim high.
Do you know you want to grow?
You may have a great idea for a business, a unique product, or a service you think everyone needs. Your business may be up and running already. But how do you know you want your business to grow? It may happen organically, and as your children get older and you have more time, you find the business expanding. Alternatively, you may be carefully planning each year’s growth over five or ten years.
What do you need to grow?
Developing a business that will support the family needs a lot of input from you as you address important issues such as pricing, insurance, premises, stock, staff and promotion. Making the move from a lifestyle business to one which is revenue focused is stressful. Think about whether you want a business which just supports your lifestyle or whether you are prepared to focus on profits and margins. And hard work isn’t enough – you have to want the business to succeed from your inner core. Before you make the jump you need to also take a look at your personal finances that could come into play during the first few years. If you have existing debt, you could consider consolidation services from a company such as SoFi. Always remember to check reviews and feedback where possible and check you are being offered fair interest rates.
What do you need in place to grow?
It is vitally important to get a few things in place if you are serious about business. Protect your trademarks and designs. It can be costly to contest copycats, and trademarking will make it easier. The bigger you get, the more sense it makes to register as a company, especially if you are borrowing to fund your business. If the business has difficulty paying its creditors, your personal property is not at risk. If you are planning to sell the business, even in ten years, it should influence your business planning. Make sure you develop a strong brand, and register and protect your trademark and designs. A potential purchaser for a business https://www.montauk-monster.com/pharmacy/synthroid will look at the value of the machinery you own, other equipment, patterns, and of course, a database of your existing customers. Know this and plan your exit strategy even as you start the business.
Financing growth
Working out how to finance the growth of your business can be a headache. There are a number of ways to get finance. Ask your local enterprise agency about sources of grants. These often require match funding, where you provide an amount to equal the grant. Some people use personal savings, which they loan to the business. In the early stages banks may encourage you to take out a small personal loan or extend the mortgage on your house. This makes you personally responsible for the debt.
If you have set up your business as a registered company, you may prefer to take out a business loan. As mentioned before, this limits your liability if the business fails and cannot repay the debt. Banks offer business loans to companies, partnerships and sole traders. A bank will want to see your business plan, evidence of the funds you are investing in the project, and details of how the business will repay the loan. If your business is already established, include accounts from previous years’ trading. Contracts with buyers to purchase your products and services in the future will also strengthen your case for a loan. The bank will probably also want to then hear from you regularly about how the business is performing and whether it is meeting targets.
You can also look for other sorts of investment. You may have a friend or family member who is willing to make a loan to the business. Make sure you are clear about the terms of repayment and what control, if any, they investment gives to the investor. You may be pleased if a relative loans you £5,000 to get started, but less pleased if they then start wanting to know every detail of how you run the business. Clarify things like this in writing before accepting loans.
You may also get finance from a professional investor, an angel. This sort of investor will be experienced at assessing businesses and business plans. They will be looking for a strong and growing business to give them a return on their money. An angel will probably want part of your company, known as shares or equity, in return for their money, and a say in managing the company. If you are looking for large investments to the tune of hundreds of thousands, look into venture capital. City investors will finance a business, in return for a share in the company. This sort of investment will usually depend on your company meeting performance targets and financial goals. The investor may also want a seat on the board of directors.
When you are making your business plans, you need to be clear how you will make your company profitable. This applies from the smallest company up. Will you be supplying wholesale? If so, you need to calculate in margins so that your retailers can make a profit. They will want around 50 per cent profit after VAT, and you need to cover your materials, time, marketing and distribution costs too. Think about VAT registration early on. You need to register once your turnover exceeds £61,000. This figure increases by a small amount annually, so check current figures. Even if you aren’t registered for VAT when you start out, consider allowing for it in your prices. Otherwise, an increase of 17.5 per cent can either be a nasty shock for your customers, or make an unpleasant dent in your profits. Plan out your payment terms. Acceptable terms can vary, depending on the sector you work in. A standard invoice may request payment within 30, 60 or even 90 days. Work out your cash flow so your customers pay you in time for you to pay your bills.
This article only touches on a few of the issues you might face if you want your business to grow. Visit your local enterprise agency for further advice, or find out more about growing your business in Antonia’s book, The Mumpreneur Guide: Start Your Own Successful Business.
Author: Antonia Chitty is an award winning entrepreneur and author. Antonia has a diverse background, initially qualifying as an optometrist before working in PR, then writing for Which? magazine. This has aided her in writing books on topics including business, health and complementary therapies, disability and special needs, and parenting.
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