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When is it Time to Expand Your Business?
Rebecca Casarez, CPA
There are several ways you can expand your business. You can hire another employee, open a new location, or even outsource a service. Making the decision alongside an accountant can give you even more confidence in whether it is the right decision. So here are some factors we consider when deciding whether it is time to expand.
Business owners are no strangers to making decisions. From trying to nail down your terms and conditions to scheduling team meetings, it may feel like our judgment always needs to be spot on. So when it comes to expanding your business, it can require a lot of factors to consider.
Breaking Point
As you bring on more clients or sell more products, it is going to be harder and harder to make time for things like accounting, marketing, research, and general admin items. At first, you may be able to find a schedule or rhythm that works where you can dedicate the necessary amount of time, but with each additional sale, you are going to need more resources.
The breaking point is the point at which you can no longer do “it” on your own. Maybe that is the accounting, customer service, or making the products by hand. When you are starting to realize you do not have the time and your process is established, it is a sign it is time to expand.
This is one of the first factors we consider, the next is the return on investment.
Return on Investment
If you are at your breaking point and know you no longer have the capacity to take on more, your next question may be how do I expand? Maybe you are considering hiring an independent contractor or just need someone to take on the tax work. When you are deciding on how you should expand, consider the return on investment.
If you sell widgets and your machinery has maxed out the number of widgets produced, but demand is still high. This is a clear sign you may need to invest in capital. Maybe you want to increase your perceived value, so you hire a marketer. One area we don’t consider until it is often too late is accounting.
We recommend outsourcing your accounting early on because it can provide a return that is more than just a good tax refund. When you hire an accountant, you give yourself the opportunity to analyze your business differently.
It is no longer about just sales or your bottom line. You can get help on understanding why your cash flow is struggling or have someone notice patterns in your sales that can better help your prepare.
When you are looking to expand, consider ROI and whether the cost of paying for the expansion will be worth the investment.
If you are considering expanding your business and think outsourcing your accounting may be the way to go, schedule an appointment with one of our ProAdvisors if you have decided it is time to expand.
Disclaimer:
This publication is designed to provide information on federal tax and accounting laws and/or regulations. It is presented with the understanding that the author is not rendering legal or accounting services.
This text is not intended to address every situation that arises or provide specific, strategic tax and/or accounting planning advice. This text should not be used solely to answer tax and/or accounting questions and you should consult additional sources of information, as needed, to determine the solution to tax and/or accounting questions.
This text has been prepared with due diligence. However, the possibility of mechanical or human error does exist and the author accepts no responsibility or liability regarding this material and its use. This text is not intended or written by the practitioner to be used and cannot be used by a taxpayer or tax return preparer, for the purpose of avoiding penalties that may be imposed.
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