My consulting clients are typical of most entrepreneurs. They are true
pioneers and free spirits with a need to succeed. They also share one common
concern: making more money for their business. My suggestion is to diversify,
similar to investing in the stock market.
To increase earnings, I counsel my clients to investigate the possibility of
adding products or services to their existing business. This might include
carrying a new line of retail items or adding a service to complement their
current business.
However, before you expand your business, it's important to address the
possible road blocks to your successful expansion. For instance, will your
proposed expansion require a totally new entity, or will it make sense to simply
run your expanded operations under the umbrella of your current company?
Also consider whether your present business operates out of an office
building or lease space. Will management allow you to run an additional business
from your current space? Thoroughly investigate all issues related to an
expansion including taxes, zoning and licensing. If you're working from home,
check with your homeowners' association to avoid a fine or worse.
Services
Adding services requires little or no inventory, but it does require a
reasonable amount of effort. Examples of additional services include a
landscaper adding snow removal or a restaurateur integrating a catering service
into her current business. Other examples might be a realtor staging homes for
added income or a dog groomer providing a sitting service. Choosing a popular or
needed service within your demographics is the best guarantee for success. For
example, in a suburban area, residential lawn services will be requested more
often than in a downtown city area.
Staffing for a service-oriented business should be handled with care.
Consider the possibility that a worker may be injured on the job or cause damage
to a client's home or business. Make sure the cost of bonding and insurance
won't consume all of your additional profits.
Adding new duties to an existing staff can cause a mutiny. I once had the
idea to add on a housekeeping service to my existing business. My seasoned
executive staff was thrown into hiring, firing, training and scheduling workers.
The possibility of having to replace my staff was real and imminent until I
found one person willing to step in and run the entire housekeeping business
single-handedly. The addition of a new employee was cost-effective, and my
original staff resumed work with their previous congenial attitude.
Once it appears that expansion is inevitable, avoid drastic personnel changes
that might diminish your employees' standing within the office. Keep your
employees in the loop and assure them that the change will be positive and not
detrimental to their environment or career. As your company grows, make sure
your workers' comp and general liability policies are adequate and up-to-date.
One common service many businesses offer is consulting. Although this can
bring in a substantial income, you'll need experience, excellent communication
skills and an outstanding ability to network.
Businesses often decide against expanding because of concerns over increased
payroll taxes and other expenses affiliated with bringing on new employees.
Independent contractors can sometimes replace your regular employees if you
follow IRS guidelines carefully. However, should the IRS challenge the use of an
independent contractor, the employer may owe fines and past taxes and be open to
other legal troubles.
Products
The expense involved in developing and adding a product to your existing
business model can be costly. The initial product concept is typically followed
by a design and a prototype. To protect your new concept, you may need a patent
attorney. Product development also comes with certain responsibilities and
liability for the safety of your product.
If creating a new product seems a bit intimidating or isn't right for your
business, you can opt for adding other people's products to your business. If
you have the space, add on impulse buys for additional profits. Great examples
would be a law firm selling art in the lobby, a hairstylist marketing jewelry in
the reception area and a vet selling animal-shaped chocolates at the register.
Any additional expansion of your business can add a significant increase in cash
flow.
The goal of entrepreneurship is to grow a successful, ongoing business. Once
a business is established, selling the same product or service year after year
could flatten out revenues and diminish your enthusiasm and drive. Carefully
introducing a new product or service into the mix could take you and your
business to a higher level.