Growing your company is an extremely exciting time. However, you shouldn’t be jumping into a heavy growth phase without careful planning and consideration.

Growth involves risk, and if your business isn’t built on a solid foundation, it can crumble under the pressure of expansion.

Learn how to grow your business safely and with as little risk as possible:

Gathering Capital

Like everything else in the world, growing a company requires one essential resource – money. You need funds in order to execute your growth strategy. The most common way of obtaining the required capital is to take out a loan or line-of-credit, but before you do this, it’s important to carefully consider all options and financial ramifications.

There are many options available to business owners looking to grow. You may be able to obtain the required capital by “bootstrapping” – using your own operating revenue to expand. This will require frugal financing and an entrepreneurial mindset, but could be hugely beneficial if you can make it work as you won’t have debt to manage.

You can also attract investors to your company. For this, you will need an up-to-date business plan and a very clear idea of the path ahead. You also need to be prepared for your books to be scrutinised in detail.

If you can’t secure a loan through a bank, there are alternate lenders you can approach. If you are lending funds to your company personally then ensure you gain advice on registering a General Security Agreement to protect your investment.

All these options involve pros and cons, and may first require a period of consolidation to pay off previous debt. Talk over your options with a business professional to ensure you’re growing your business safely.

Get strategic

When growing your business safely, you need to be strategic about how and where you wish to grow. There are many different options available to you, and you should be carefully studying the market and your core competencies to figure out where you have the best chance of success with little risk.

Think about:

• - Opening new premises to capitalize on new geographic markets.
• - Expanding your current customer base through new product lines or additional funnels – such as an online store.
• - Adding additional revenue streams through complimentary products/services.
• - Expanding your current team with more expertise.

It can help to survey current or potential customers to get a solid idea for market needs, and carefully research the most cost effective ways of expanding your business safely.

Hiring new employees

Any growth activity is going to involve hiring new staff. However, growing your business safely means not jumping into recruitment without carefully assessing what – and who – you can afford.

Calculate the cost of a new hire – their salary package, benefits, recruitment costs, equipment and supplies, and training costs. Look at your projections and sales forecast and determine if the new hire is within your budget. Then, consider how much revenue a new hire will bring in, and weigh this against your previous calculation. Refer to the employee cost calculator at New Zealand SME Business network for an idea of the cost of a new hire. Consult with your accountant if you’re unsure or are in desperate need to find the funds for a new hire.

Don’t forget that you have other options, for example, you may be able to make up a skills shortage temporarily with freelancers, contract workers, interns, or other temporary workers.