Expansion of Your Home-Based Business

Summary

What does it mean to expand your "Home-Based" business?

It could mean:

• taking on an extra product line;
• taking on one more customer;
• deciding to buy more equipment or tools; or
• moving out of the home and into a commercial location.

What issues should you be considering personally?

• Why do you want to expand?
• What will be the effect on you, your personal life, and your family?

• With expansion will come more potential for profits and potential for problems.
• It could possibly mean more time away from home or time devoted to the business in the home at the sacrifice of family.
• Will you still enjoy the business?
• Will there be more traffic to the home and what will be the effect on your privacy?
• Will you need to invest more personal financial resources into the business and do you have, or want to risk it?

• How do your expansion plans fit into your shorter and longer term business objectives?

• It will depend on your motivations for starting and operating your business from the beginning.
• Will it give you the extra financial return you may want and/or need?
• Is it one more step in your longer term plan that may include ending up in a commercial section of your municipality?
• Is the profit potential and return for your time and investment worth the effort?

What are the operational considerations?

• Is there a market opportunity and will there be a market reaction to your expansion?

• Have you researched the idea?
• A number of people start a home-based business to try out an idea at as minimal cost as possible to see how the idea develops.

• Have you a promotional plan?

• How do you plan to make the potential customers aware?
• In a home-based business you can experiment to see what the most effective approach will be.

• Will there be equipment purchases and what about utility hook-ups?
• Will you be building your inventory and what about storage?
• Will home renovations be required?
• If you have a current distributorship or franchise agreement with a company, are there limitations to the products/services you may want to add?
• Are there municipal licensing and other regulatory limitations?
• Are there joint venture opportunities, possibly with other home-based businesses to grow the business mutually.
• In other words, do you have to do it all yourself or can you link up with someone who complements what you do to mutual advantage?

• Do you have the management skills?

• You will have to further assess your own abilities and skills.
• If you feel deficient, how do you acquire them and what are the time lines and costs to do this?

• Are there employee supply considerations.
• Have you established the costs and source of funds to make your plans work?
• Have you done a cash flow/budget analysis to evaluate the idea?

• Cash flow projections have limitations, but they are a planning tool and force you to identify your costs and estimate revenues on where you want to go.

• Have you a timetable?
• Have you a business plan?

Prepared by: Saskatchewan Industry and Resources, Business and Co-operative Services