It takes a lot of courage to start a business. Entrepreneurs must progress through several challenging phases of growth before they truly reach success. They don’t just need to deliver a service effectively, they also have to connect with the right market for their offerings. Once an entrepreneur knows that they have a good product and a real audience for it, there are several ways they might decide to expand.
One of the most common ways of growing is through market expansion. This means taking current products and making them available in a new marketplace. So for instance, a bakery opening a second location is a kind of market expansion. Both bakeries might sell all the same products, they’re just doing so at two different outlets. Another example is a brick-and-mortar retailer making goods available online. Being able to be searched by consumers around the world can mean much more traffic than one physical store would ever achieve.
Another common way to expand is to change the services and products offered by a business. This is known as a product expansion strategy. By adding services or features, a small business can potentially uncover whole new markets. An example of this might be a cabling company expanding into related areas like fiber and server maintenance. Reasons for product expansion can include a change to consumer trends and technology. Many small businesses find they need to tweak their services or product lines as tastes evolve with time.
Sometimes, a small business is poised to really take off. The owner has an established, successful business model. They have good cash flow. However, the reinvestment of profits often isn’t enough to allow for real expansion. Typically, financing is also required if a small business is really going to make a big push for growth.
Equipment financing can be a great solution during this point in the lifecycle of a business. This type of credit is a great way to purchase new or used equipment. All of the soft costs like labor and delivery are accounted for with equipment financing. Finally, Section 179 of the IRS tax code makes it possible to deduct up to $1,000,000 from gross income in one calendar year. This means that equipment financing can be a very efficient way to expand.