Time to expand your business?

HOW TO MAKE THAT DECISION IN UNSETTLED TIMES

A North Country inn is increasing the size of its guest rooms to accommodate changing tastes. A restaurant that only served breakfast and lunch added dinner to its offerings after moving to a high-traffic location in Gorham. An early learning center on the Seacoast has grown to the point it’s franchising its successful business model. Three businesses, three different ways they’re expanding.

There are many stories like that in New Hampshire, and it’s the same around the country. National surveys show, despite some financial headwinds, a majority of small business owners are optimistic about the economy, confident about their finances, and are expanding or considering expanding to fuel growth.

“If you want to continue to grow, you need to expand,” says Lori Cote, Team Leader of Small Business Lending at Service Credit Union. And many of the New Hampshire businesses Cote works with are expanding or making plans to. “They’re ready to break into something new. They want to take over a larger share of the market. They want to have a larger customer base. They want to be more well known for what they offer their community. They want to make a bigger name for themselves. They’re ambitious.”

Before a business moves forward, though, Cote says there are foundational pieces that need to be considered. First, finances. She says review your business’ net income and projected revenue to make sure the numbers work. “Make sure you can cover the costs of expanding and that you’re prepared for something unexpected by having reserves.”

Next, Cote says, determine how you’re going to expand: “Maybe you offer a new product, maybe you add on services, or maybe it’s a twist on what you’re already offering.” Then, she adds, determine how you’re going to offer it — whether it’s primarily online or in a storefront. If it’s a storefront, have you determined the best location?”

Another way to expand is to add employees. A business’ growth can slow, Cote says, if everyone is working at maximum capacity: “In the smaller businesses, one additional employee can make a world of difference. Being able to share the workload can increase everyone’s capacity and allow the business to grow.” But Cote cautions that adding employees may be challenging in this economic environment, with the unemployment rate at near-record lows. “Many businesses aren’t able to expand because they can’t find people to hire.”

Another challenging part of the economic environment — rising interest rates — doesn’t seem to be a factor for most businesses looking to expand. “You would think higher interest rates would mean volume is slowing down, but it’s not,” Cote says. “I think that the businesses that have done well through COVID are just continuing on that trajectory, and they’re not rate shopping. They’re thinking, ‘This is what I need. I’m going to pay what I have to pay to do what I want to do for my business.’”

Cote gives the example of a business owner she’s working with who just expanded his fleet of business vehicles. “He just added three and is planning to add a couple more,” she says. “You would think, with interest rates going up and the cost of vehicles so high, it wouldn’t be the time to do it, but these times are not the norm.”

Whatever risks there might be, Cote says they can be minimized by market research: “It’s important to see what there is for competition. And ask yourself, ‘What can I offer that isn’t what everybody else is offering? What is it that’s going to set my business apart? What will make people gravitate toward my business rather than others?’”

She adds that another important part of market research is listening to your customers, determining how they want you to expand — whether it’s a new product, a new service, longer hours, more locations or something else. That information can be gathered with informal chats, interviews, surveys and reading online reviews. Also, Cote says, research the outlook for your industry, determine whether it’s primed for growth — or not. Recent reports say the fastestgrowing industries nationwide are real estate, hospitality and consumer retail.

Once you’ve determined you’re going to expand your business, Cote says create a new marketing plan by asking, “What’s my target market?

Is there a particular age group? What’s the best way to reach them? If it’s online, put your marketing money there. It could be newspaper advertising, though fewer people are reading newspapers. If you’re expecting most people to walk in, then the signage for your location is really important.”

All the financial resources needed for business expansion — commercial mortgage, credit line, vehicle and equipment loans, business credit card and facilitation of SBA loans — are provided by Service Credit Union (see more details on p. 13). All commercial loans will have a fixed rate for a period of up to seven years, a plus when the rates are rising. “There’s no prepayment penalty,” Cote says, “so someone can pay down that principal balance as much as they like. If rates drop, they can refinance for a lower rate.” In a more stable economic environment, fixed rates up to 15 years are offered.

“We’re getting calls every day from people who see an opportunity and have decided the time to expand is now,” Cote says. “We’re here to provide them with the resources they need to succeed.”

The Inn at Ellis River is expanding its business with larger guest rooms. A new location generated more traffic for The Depot restaurant.