Business Growth: Expanding Without Breaking Your Budget

November 17, 2016 by CNH Finance, LP in category “Financing”

There comes a point for most companies where business growth causes a strain on operations. Customer requests start exceeding the means of production and delivery. Facilities become too small to provide the quality and volume of production necessary to keep up with demands. There is a need for specialized employees to complete internal projects to take the business to the next stage of development, successfully. How can entrepreneurs achieve business growth while sidestepping the strains placed on operations and cash flow?

Prioritizing Business Growth

Business growth is riddled with pitfalls, if not approached carefully. Expanding and upgrading all at once will decimate a budget quickly. Business growth can only be successful if entrepreneurs identify and address the most pressing needs first. Maybe moving into larger facilities would ameliorate certain growth issues. Upgrading to better and more efficient equipment to fill customer orders may eliminate the need to hire more employees. Putting together a specialized and effective team to roll out new products and services can give an edge in a highly competitive marketplace. Maybe a leveraged buyout would solve the problem of space, equipment, and resources in one fell swoop. Being able to identify and prioritize the issues causing growing pains is the first step toward successful growth.

Grow Incrementally

Once you have prioritized the areas which need the most attention for growth, you should draw up a plan to implement change. Many businesses fail because they try to upgrade and grow in every direction all at once. Much like a diver getting the bends from depressurizing too quickly, a business can burn through resources too fast when trying to attempt growth across the board. Rapid business growth in all directions can leave a company in worse shape than before all of the changes were implemented. Go through the list of priorities, and work on the most pressing items first. While the desire for immediacy will always be present, being patient and using measured implementation will yield the best growth results.

Growth Financing

Not all growth financing solutions are equal. For example, traditional loans and similar financing products place debt on the balance sheets, which can greatly hinder cash flow. Capital which would otherwise go toward sustaining business growth become budgeted out to repay traditional loans, often leaving businesses back at square one. Asset based lines of credit, on the other hand, are flexible and structured around the value of items such as equipment and receivables. This gives entrepreneurs the purchasing power they need to grow their operations incrementally, without assuming additional debt.

To find out more about asset based lines of credit for growth capital, contact CNH Finance today.

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