If you’ve made it this far then you’re either already at the helm of a successful team or you’re confident that you will eventually grow your business to the point where you need to make some smart quarterback calls.
Expanding a business can be tricky. Some of it is knowing when the timing is right, but often growth is unexpected, driven by sales and the need to satisfy rapidly changing customer needs.
This can lead to some tough calls. To help you make the right call, we’ve included some of the main topics that come up with business growth, planned or unplanned.
MO’ MONEY, MO’ MONEY!
This is the sequel to our earlier discussion where you considered sources for financing your business at in the startup phase. Many of these strategies still apply, but you want to be careful not to trade money to grow for unmanageable debt. Of course, there’s no such thing as money without strings, so be aware of this before diving in.
Following are some sources for funds to fuel growth.
- U.S. Small Business Administration
- Small Business Development Center
- Washington Department of Commerce
- Office of Minority and Women’s Business Enterprises
- Washington Department of Financial Institutions
- Washington Economic Development Finance Authority
- Bond financing assistance for construction projects
A Loan Again, Naturally.
You may also want to consider loans. SBA loans are actually made through commercial banks and credit unions, not the Small Business Administration and are guaranteed by the U.S. government. The Department of Agriculture also makes loans that are guaranteed in this fashion.
The five C’s of lending that you had to consider when you opened your business are the same for a business loan to expand or grow. If your business is established, you’ll typically have to show equity in the business equals at least 25% of the loan amount you’re seeking, or that you can bring in additional cash so equity plus cash will total at least 25%.
Some loan possibilities include standard commercial loans from banks or credit unions, SBA 7a loans, which can be used for any business purpose, SBA microloans which are up to $50,000, and SBA 504 loans, which can be used for real estate and major equipment purchases.
Of course, you can always go the investment capital route. This would mean getting investors for your business who want to put in money in exchange for a piece of the action, a seat on the board or favorable terms on their investment. This is a highly regulated way to fund your growth, but it is a fairly common one. Remember, however, that you may have to surrender some control over your company in exchange for investment funds. We already covered the basics of this earlier, explaining the difference between angel investors and venture capitalists, the latter being more likely to invest in a mature company.
Need More Ideas?
The Washington State Department of Commerce has put together a great resource for other strategies for accessing capital, from the traditional to the cutting edge. Startup Wisdom: 27 Strategies for Raising Business Capital is free to read and download.
ADDING PLAYERS TO YOUR TEAM
It’s a great feeling to go it alone when you start out, but hopefully, you’ll quickly come to the point where you need some additional players on your team.
Having the right employees is critical to your success and there are lots of resources out there to help you in your planning, including Workforce Explorer.
If you noted on your Business License Application that you would be hiring employees, this information was forwarded automatically to the Employment Security Department so a state unemployment tax account could be set up for your business. The Department of Labor & Industries was also notified during the application process so a workers’ compensation account could be set up.
If you didn’t say you were hiring employees but are planning to do so now, you need to remember to refile your Business License Application so that the Department of Employment Security and Department of Labor & Industries can set up your employer/employee accounts. Reports need to be filed quarterly with the state as well as the IRS if you have employees.
Every new employee is required to complete the federal I-9 Employment Eligibility Verification Form within three days of hire as well as an IRS W-4 Form. Every new hire or rehire needs to be reported to the Department of Social and Health Services New Hire Reporting Program within 20 days of the hiring date.
If you have employees working for you on-site, you need to create a safety plan. To find out more about that, visit this page.
Adding independent contractors to the team needs careful consideration. The definitions are pretty strict so you need to make sure they are truly independent contractors. This means that they are in business for themselves, are licensed, actively market their services, have multiple clients or customers, perform work that is outside your normal business activities, and direct their own work with little to no supervision.
If you want to test the waters for adding capacity without adding staff, you may want to check into places like Upwork or Guru where you can hire people on a per-project basis or for a fixed amount of time. Many entrepreneurs tap into these resources to grow without adding overhead.
To learn more about your obligations and responsibilities as an employer, visit the Employment Security website.
PERKS OF THE JOB
As you add players to the team you’ll undoubtedly want to think about offering benefits, too. This can range from vacations and sick leave to disability insurance and retirement plans.
Washington State offers employers and employees affordable retirement savings plans through the Small Business Retirement Marketplace. A range of IRA and 401(k) type plans are available and employers can either set up a program for their employees or offer employees the chance to sign up for a non-employee sponsored retirement plan on their own.
The program is voluntarily and the plans are verified and approved by the Department of Financial Institutions and/or the Office of the Insurance Commissioner. The plans themselves are offered through private retirement plan providers.