As the owner of a local small business, you know the hardships involved with getting a company off the ground. Chances are, you took out some commercial loans, tapped other sources of funding and operated at a loss for a while after opening the business.
If things finally begin to turn around, your balance sheets look less dismal and you even start running a profit, it can be tempting to jump headfirst into expansion. Expansion can take many forms, including bringing in more employees or opening additional locations, but while it can seem like an exciting next step, taking the plunge before you're really ready can have disastrous consequences, including insolvency and the ultimate demise of the company.
Inc. magazine recommends asking several questions to help determine whether your business is truly prepared to ramp things up. It's important to figure out how much working capital your business really needs, and to look at how it's being used. Where is it getting tied up? How can you unlock it? Are you using it to fund non-variable operating expenses?