So You Want to Grow?
Now that the world has been tilting back toward normal, with vaccines happening and mandates being lifted, you are looking to the future.
With the market that we are in right now in real estate and SBA loans having the $0 down, the time is right to expand your empire. Before you jump into the deep of the pool and get yourself in trouble, answer a few questions and do a little homework. It is easy to add stores, but are you doing it wisely?
Do your homework.
One critical mistake to make would be to just go out there and plop a store location down somewhere just because you do not have one right now. Do a little research beforehand with the area. You want to consider the population, the median income, and most importantly, the number of competitors in the area. That pie can only be sliced but so many times with the customer base.
Taking a ride in the market is a valuable piece of knowledge. You will get the opportunity to see how the traffic flows around your potential property and how others are doing in their businesses. If your competition is not doing cars when you are checking out the area, that could be a sign that you may be looking in the wrong spot. Patience is a virtue. That wisdom applies to business, too.
Own or Lease?
This is an important piece of your decision making about growing. The rule of thumb is that land is king. But look at the options out there for properties to just move into or convert. Some advantages can be said for this way of going to business in a new market. It allows you to get a foothold and see if you are in the right place.
If you want to own the land, remember that it’s so hard today to get the right properties for a competitive price. Those selling the property will generally overvalue their plot of dirt based on a Target a block away or the number of vehicles driving by each day. Sure, that is all important in our business, with anchor stores bringing business to that road, but a little searching could get you a much better number.
When you are growing, sometimes you will need capital. It can be difficult to know what type of financing is right for you. If you are just looking for a short-term injection of cash to get you started, then a long-term loan would not make much sense. Also, you want to investigate the terms of the loan and the interest rates, as you do not want to be in the line for years for cash that was used in a few short months. Funding is just one part of the growth process, but make sure that you are managing your cash flow. Forecast your short term and long-term expectations for the business and take this into account. You do not want to get so deep that you are working and making no distribution.
Use your Network
Another way that you can expand your empire is to get your name out there with other business professionals. Join some groups on LinkedIn, attend business seminars, and get it out there that you are looking. There is a potential that one of these network contacts knows of a spot in your area or can get you in contact with another business owner looking to get out. Even if you cannot find what you are looking for, listen to their insights. You gain valuable knowledge in hearing what others did right and wrong prior to you making the same.
At the end of the day, expanding your business involves several decisions that have a calculated risk, moving your business into the future.
Only you will know how much is too much for you and your business, as well as what you expect to get in return. Decide how best to approach the locations, staffing, and financing. Do not forget that expanding a business takes effort, planning, capital, and a lot of signing documents. Be sure to look at your business’ past performance and make the right decisions to grow that performance. But do not forget that you do not just go sprinting into the first opportunity that hits the board.
The tortoise will always beat the hare.