Growing a home-based business shares many aspects of growing a traditional small business. There are however a few specific details you need to consider in deciding if it is time to grow and how to do it. The following are a few areas of business you should check in order to help you make wise decisions about growth:
1) Overhead
One of the greatest advantages of a home-based business is you have very little overhead in comparison with a traditional small business. If growing is not going to increase your overhead costs along with your profit, generally you're making a good move. You have to use caution to make sure growing isn't going to harm you more than it helps.
There comes a certain point in some home businesses where it just makes sense to move it out of your home. If you feel like your business has swallowed up your whole house, it may be an option to consider for your sanity and for your family. Rent space first before you buy since you often have little idea if a specific location is going to help you or not. Make sure you can pay the rent without having to borrow the money or having a major loss in profit every month.
2) Time
If you are the only one doing the work for your business, you want to make sure that the profit is going to be worth it in relation to any extra time you have to spend. Ideally, most businesses should require the most intense work in the first few years and take less and less of your time long-term.
If you decide you need more help but fear traditional employees would drain you, consider negotiating a situation where anyone who works for you gets a percentage of the profits they create for you. Avoid legal partnerships however because a majority of those end in disaster when two or more people's goals begin to go different directions. If you are considering adding more people to your business, I would recommend consulting a local business attorney in your area to make sure of the details that would apply and getting their advice.
3) Quality versus Quantity Growth
This can apply to product and service businesses. If you have a service business and have grown in experience, consider raising your rates for new customers. This will increase your profits and decrease your work load. If you're selling products, consider diversifying into higher quality products with greater profit margins. You don't have to give up your existing products, just offer more options.
In other situations, you just need to offer more of what you already have. In making these decisions, you may want to do some experimenting on a smaller scale to see what will work and what won't.
4) Cash Flow
In home-based businesses especially, you should never need to borrow money to expand. This is what sinks a majority of businesses period because beginning profits can't outrun the interest of loan payments. You can get stuck in a financial cycle or even fall behind and lose your progress you've worked so hard to build. It's hard sometimes, but exercising patience will help you succeed.
5) Ability to Diversify
Are there areas related to your current business that it would just make sense to branch into? Since you may already have experience and education, learning a related aspect of business would take less time and give you more stability.
I hope these ideas have been helpful to you. Best wishes to you in growing your business!
Article by Patricia G.
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