All retailers want their companies to survive, but a select few reach a point where their brands actually thrive. Unfortunately, this success also comes with stress. As your brand continues to grow, you are left wondering if you can afford to risk expansion, and how you can even manage its growth.
If you have made it this far, you can advance and grow your business. Take the following six factors into consideration when you are expanding your retail business.
Know When It Is Time to Increase Your Selling, Service and Office Spaces
If you currently run your operations in a small co-working space or a location growing more cramped by the day, expansion might mean moving into a bigger space. You may need a dedicated location that requires higher rent or mortgage rates. This expansion likely gives you the room to hire people to scale production, service and distribution.
Review your lease and identify the best time to increase your space. Look for affordable options around your desired target market. It may be in your best interest to stay where you are right now rather than expand into a less-than-ideal location.
Also, you need to time your move carefully. The last thing you’ll want to do is adversely impact your shoppers, customers and staff during any seasonal peaks.
Determine the Best Way to Fund Your Expansion
Your business has plenty of choices when it comes to funding expansion – and choosing the right one is up to your team. You can save over the year and use your cash flow to fund your expansion, you can work with investors on funding, or you can seek out a loan. Each of these options comes with their own risks and benefits. Talk with your accounting team and your financial advisors to see what your best choices are.
As you consider your funding options, examine working capital loans. These loans are meant to fund your existing operations in the short term while your cash flow covers immediate expenses. For example, a working capital loan could cover payroll and pay supplies while the existing revenue is used to rent a new brick and mortar location or expand production. These loans are typically smaller and meant to be paid back in the short term, which makes them ideal if you need funds to cover your costs over just a few weeks.
Test Expansion Options with Pop-Up Shops
If you want to expand your retail business but aren’t able to commit right away, consider testing a pop-up shop. Pop-up shops typically last for only a few weeks or months and give shoppers a feel for your brand. It is a great way to test out a new market and see what kind of demand you can expect in a certain space or area. Some short-term leases might also turn into long-term opportunities if the landlord is eager to fill the space.
Plus, if you need your investors to approve your expansion, a pop-up shop is a great way to prove how successful your retail business can be.
Regularly Audit Your Expenses to Maximize Efficiency
It is easy to get caught up in the daily operations and expansion process, but the good habits you build today can help you through whatever comes your way. Make a point to audit your expenses annually (or even bi-annually) to look for waste. This includes:
- Tools you bought at one point and don’t use anymore
- Overpaid consultants or agencies that don’t provide value
- Bloated rent and mortgage payments that need adjustment
- Unchecked overtime driving up payroll costs
Your goal is to do more with less without cutting corners. You simply need to identify waste and remove it from your expenses. If you keep this process up, you can stay within your budget and expansion goals.
Look for Services That Are Scalable
While you might have your eyes on expansion right now, you need to think about your brand in the long run. A modest expansion might lead to future growth, and soon you could have a large and thriving business. As you evaluate your various systems, software tools, and investments, make sure they will grow with you. Find human resources tools that scale with your business, and look for a point-of-sale system you won’t outgrow. This will help you save and grow easily in the future with few problems.
You Can Manage Your Expansion Costs
You don’t have to be risk-averse to have a successful expansion. You took a risk when you opened your doors, and so far the investment has paid off. By building the right safety net and weighing your options carefully, you can expand your retail company to even more shoppers and regions.
About the writer: Derek Miller, MBA, is a digital marketing expert working with small-to-medium-sized businesses and start-ups. His experience includes developing content marketing strategies for clients of CopyPress, working with local businesses in Tampa, Florida to grow their online presence, and planning the digital growth initiatives for Great.com, among others. He also writes frequently for publications like GoDaddy, TheBalance, and StartupCamp.
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