Accounting for the costs of business growth

By Henry Brown

There are numerous signs that your small business is ready to go to the next level. Perhaps you have outgrown your office space? Maybe you have spotted an opportunity to bring a related product or service to market? No matter what is the case, if you are going to expand your business successfully, you need to account for all of the costs of doing so. Accurate cost forecasting is essential, and so with this in mind, you will need to make sure you account for all of the following:

The cost of expanding your offices – There is only one place to begin, and this is with the cost of expanding your office space. This well-known company will be able to provide further information on the expense of hiring a commercial builder to expand your current office space. Of course, the other option would be to look for new office space. Not only may this be beneficial in terms of giving you greater space, but also you may be able to choose a location that gives you better access to your consumer base.

Outsourcing – Another cost that is often associated with business growth is outsourcing. After all, as your business expands, it is increasingly unlikely that you are going to be able to handle everything in-house. While it can be admirable to attempt to do so, it can actually end up costing your business a lot more money in the long run. This is especially the case if these new and as yet unproven activities are getting in the way of the core activities of your business, i.e. what makes you profit. So assess what you can outsource in order to get your new endeavor off the ground successfully.

Taking on new employees – It is likely that you are also going to need to take on new employees if you are going to expand your business. You are probably already aware of the costs associated with this. However, you should never overlook the costs of hiring the wrong person. So make sure you take your time and don’t rush a decision that you might soon regret.

Employee retention and corporate culture – When attempting to take your business to the next level, it is more important than ever to ensure you have an effective office culture. Not only this, but you will need to have a strong team in place, which means you need to pay attention to employee retention rates. The last thing you want is for key personnel to desert you as soon as you put your expansion plans in action.

If you identify things you need to do to improve the culture in order to keep your employees happy and committed or to prepare people for the business expansion, act sooner rather than later. For example, if new training will be needed in some areas to assure a greater chance of success with the planned growth? If so, count this cost toward the cost of the expansion.

All in all, if you are ready to expand your business, it is important to account for all of the costs that are associated with this. This will ensure that you are able to manage your cash flow effectively during this time so you can transition and expand successfully.

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Henry Brown is an online marketing executive. When he isn’t talking shop he’s roaming the streets of London, uncovering the extra-ordinary in the ordinary.

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