Dear Dangerously in Love with Your Finances,
We are a pet grooming business located in Colorado. I started this business 4 years ago by myself, and now we have four staff employees. Next year, I would like to expand our business model with additional services such as dog walking, dog daycare, and dog training. I believe our finances can support this expansion. Nonetheless, I know that believing without planning does not translate into positive cash flow. How do I know if my current financial position can support such a vast expansion?
~ Pet Grooming Business Looking to Expand
Hi Pet Grooming Business Looking to Expand,
Being a dog lover, I would love to have an all-in-one pet grooming business in my neighborhood. You already have a relationship with the dog and the owner since you are the dog groomer. Why not continue this trusted relationship?
You are correct: believing and hoping are not the only components that drive an expansion to be financially successful and produce a positive cash flow.
There are few questions I believe should be answered before you jump the broom on expansion:
Question: What are the financial trends for the last 2-3 years?
Why: The results will give you a sense of seasonality and which months produce positive cash flow.
Question: What is the grooming facility’s working capital?
Why: The results will show if the grooming facility has money to pay its short-term obligations and continue to pay for the facility’s operations.
Question: What is your business credit report?
Why: You may need to get a loan to support this expansion. You don’t want all of the grooming business’s savings or reserves to support this expansion. If you’re considering taking a loan, here’s an article with helpful info about what you may need to get approval for a new business loan.
Questions: Do you have a financial team/advisor?
Why: Your financial team will be able to review your dog grooming business’s financial position. Such information will be prevalent in moving forward with your expansion. Your financial team will act as your devil’s advocate -supporting you but at the same time identifying holes in your financial expansion plan. Don’t have a financial advisor? Consider hiring one before an expansion.
You don’t have to wait until next year to start planning. You can start now.
If you have any questions, please don’t hesitate to reach out.
As always ~ stay dangerously in love with your finances.