Time To Prepare For Growth (Blockage #6)

If you have successfully grown your business through the first five road blocks then it will be operating at maximum efficiency. You will realize that you need to focus on building assets when your business growth is constrained because you don’t have collateral for loans to support your growth.

Now you need to do two things: the first is to monitor and fine tune the settings that you have so that your business remains in optimal condition.

The second is to prepare to expand. This is of course optional, you may want to remain where you are, doing what you’re doing, but if you want to climb to new heights then this is how you do it.

Before we continue let’s talk about the two types of businesses: online and bricks & mortar. Expanding in the real world requires an investment into additional premises, additional stock, additional staff and so on. Expanding your online business is essentially the same – there comes a time when you cannot store your stock in your spare bedroom or garage, when you need people to run your warehouse for you, and so on. Each requires you to be able to afford the cost of expansion.

There are lots of ways to expand – organically, via acquisitions, via new partners (and their cash injection) and so on. In essence they boil down to two different strategies: organic growth and everything else.

If you plan to grow organically then you can only increase the size of your company in line with whatever spare funds you have available. We’ll talk more about Cash Flow in the next post. To grow your business more quickly you need some kind of investment, and for that you need to prepare.

Attracting a loan, an investor, or even just borrowing the money requires some form of collateral. You also need to convince the other party you are a good person to enter into the deal with, and a few other things, but before you start you need some asset that you can use to give the other person confidence.

That just means that now your business has to start building an asset base that is not connected to doing business – essentially ownership of things that are not stock or equipment.

That could be the premises in which you do business, or some other property, it could be investment is shares, art, precious gems or any other asset class you are familiar with, and it could be old fashioned cash in the bank.

Cash in the bank doesn’t just mean your operating bank accounts – you might open a Term Deposit or some other high interest account.

You are demonstrating that you have a business that is operating efficiently and that you have substantial asset backing – that is all it takes for people to accept that you are a good person to be in business with.

You only need take some of your excess cash flow each month and start making that money work for you instead of you having to work for it.

The next post will explore increasing your cash flow without having to buy large assets to exploit.

Leave a Reply