Not long ago, I was giving a workshop on budgets and financials. 

During the Q&A an audience member asked about costing for future growth.

It was a great question and something we don’t think about but should.

In this particular case, there were some critical hurdles that growth would bring, and addressing them from the beginning was a smart move.

If you’re making a product at home as you work on your business plans, budgets and projections, this is an important point to consider.

What’s sustainable and profitable on a small scale could hit huge road blocks as you scale up and it may be hard (okay, impossible) to raise prices enough to cover the growth.

Better to start out with a cushion that looks to the future.

This is where projections come in really handy. They’ll also show you where/when you’ll need to make the move to take your business to the next level.

You might think the additional volume will make up for the shrinking margins, and it could but you’re probably looking at some serious cash outlays and cash flow issues, not to mention the time/distraction that will take you away from your business.

Some of the expenses you should look at/plan for are:

  • Cost of space/build out costs
  • Permits/licenses
  • Payroll and benefits
  • Materials
  • Security deposits
  • Lawyers and other outside services
  • Utilities

How do you plan for growth?

Can your business sustain the growth?

In the case of my workshop Q&A the person asking the question has a very unique business where growth into a commercial kitchen might alter the taste of the product, which risks alienating his core customers. Since he’s thinking about all this as he’s starting up, he can plan for all of these factors.

How could planning for growth change your pricing?

Will it change your product?

If you’d like to talk about any of this, please give me a call 917-825-4499 or shoot me an email anne@amaxfield.com.

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