After analysing your business’ actual financial status if you find out that you have enough money to reinvest in order to expand then do not hesitate to reinvest your money. However, make sure that your plans for expanding your business is sound. If you didn’t factor in business expansion/growth in your original business plan then sit down on it and write a new business plan factoring your future plans before spending money. If you have factored in the expansion of your business in your original plan then review your original business plan to see if there are any revisions that need to be made and then execute your plan accordingly.
Now, if you find that you are short on resources and cannot afford to execute all of your plans to help your business grow you have two options ahead of you (I do not consider sitting back and allowing your business to remain stagnant as an option):
1. Look for other sources for additional capital.
2. Determine key aspects of your business expansion plan and execute only the most important ones.
The decision on which path to choose depends on your long-term goals, philosophy, and ability to raise money. Getting additional money can be risky (if you take an additional loan) but in the end can pay bigger rewards faster. If you invite other investors remember to factor in the fact that you will have to work with them (at least on some level), which can complicate thing. But then again you will be able to expand your business faster and if things go right you will be reaping the monetary rewards sooner.
Spacing out the expansion process means that you will not need to risk money you don’t have nor share your business with anyone else. It also means a longer time before you can achieve your business goals and thus less profit initially. However, in the long term it can also mean more profits for you (compared to having investors) because in the end, when you have succeeded in expading your business bit by bit, you will continue to be the sole owner of your business.
Originally posted on February 28, 2008 @ 7:45 am