It has perhaps never been easier than it is today to start a business – but running one is quite a different matter. The ecommerce revolution has brought the shop floor online and removed the need for any physical premises, or even proximity to customers, for profits to be made in retail, service, or any other type of business.
For the first couple of years of a company’s life, stability is the name of the game. It takes a while for customers to be found and even longer for them to arrive in enough numbers for the company to see any kind of profits. Accordingly, the first months are all about steadying the ship and aiming towards recouping initial investments in time.
It might also be a time when services such as invoice factoring need to be used. fastFACTR, an invoice finance and factoring service out of Utah, say that picking up the slack until cash flow settles has saved many a small company from going under before they even get started. That can be a fair amount of work, and not all fledging businesses even succeed.
Once some kind of stability has been achieved and profits are being recorded month-on-month, it can become tempting to simply keep things steady and just truck along. Until things like a consistently stable cash flow and an incrementally growing customer base can be ensured, this tactic certainly makes sense. Nevertheless, it is wise not to hang around here forever.
The reason for this is a simple one – it is far more often stagnation (and not financial catastrophe) that spells doom for small companies. And the only way for a small company not to stagnate is to scale up the business and move forward when the time is ripe. Judging when that time has come is particularly important. Also remember that missing it when it comes along can often be as disastrous as trying it too early.
When Is It Time to Scale?
Of course, though, knowing when the right time to scale up a business has arrived is something which is often easier said than done. Luckily, there are many signs that your business is ready for you to expand operations – to begin doing things like increasing inventory, outsourcing order fulfillment, hiring more staff, and so on.
Precisely how you should scale up is another matter for another article, but here follows some of the tell-tale signs that it’s time to take that step up.
Cash Flow is Stable
Factoring services are extremely useful when revenue is not enough to guarantee a stable cash flow – which is something actually more important than overall profits. Once you don’t need the factoring service any more, and you can meet your monthly financial obligations as and when they arrive, it’s time to scale up your operation.
You Are Regularly Selling Out
This couldn’t be a clearer sign that it’s time to invest in more inventory. If the customers are there but you don’t have the goods to make sales, then not expanding could ultimately send your company the wrong way.
Atmosphere of Low Risk
If you find that you are not making any gambles on investments which have a chance of not paying off – but you have the funds to actually do so – is a sign your business could be bigger. Be sure you can survive the failure of some investments, and then take the plunge.
Looking out for these tell-tale signs will show you that it is time for your company to get bigger. You should then see to it that it does.
Check out the infographic below for more information on business growth and market expansion!
Infographic created by Excellere Partners, an entrepreneur investment partner