One of the thrills of running a business comes from seeing it grow.
No matter how small you start, if your business is successful, the time will come when you start thinking about moving things onto a higher level.
This might mean taking on new staff, moving to a bigger location or expanding the range of products or services you supply.
But how do you know when the time is right to move your company on? Here are some key signs your business is ready to take a step to the next level.
Exceeding the VAT registration threshold
When you first started your business, you might not have had to pay VAT at all, as businesses are obligated to pay VAT if their turnover is above £85,000 a year. Businesses can, however, join the scheme voluntarily even if they aren’t above the threshold.
If your company is consistently exceeding that, it could be a sign you’re ready to take things onto a higher level.
At this stage, it’s important to get good advice from your accountant. A qualified financial advisor can support you in making the most of your company’s growing success.
Turning away work because you haven’t got capacity
No one wants to turn away work, but having to do so is a clear sign your business is ready to expand.
If your business is regularly turning down jobs because you just can’t meet demand, it might be time to take on more staff.
It could also be a sign that you need to think about a bigger workspace or even opening another branch of your company.
It’s important to be sure the demand is there. Pay attention to what your customers want, including those you can’t currently help out.
Good financial advice from your accountant can help you rise to the challenge of expanding your company.
You’ve been profitable for several years
Consistently making profits is the goal of any business and if yours is doing this it’s definitely a good sign.
A clear positive pattern of profits shows that your business is ready to take the next step to a higher level.
It’s important to be sure your profits are steady and consistent, however, as many businesses experience sudden spikes in profits which don’t always last.
The goal will be to first maintain a level of profit over the years and steadily grow.
Your sector is showing strong growth
The nature of your businesses can make a real difference. Some sectors, such as eCommerce, go through particular periods of growth (seasonal growth, for instance), so it’s always worth keeping an eye on trends in your sector.
If your sector is struggling in general at any given moment, as hospitality did during the worst of the pandemic, it might be wise to put aside plans for moving up a level for the time being. That said, it might also be a sign for you to consider diversifying the services you supply.
Make sure you keep yourself up to date with the latest industry news so you know when is the best moment to take your business to the next level.
You have capital to spare
Having capital going spare is a dream situation for a business owner, as you can put some aside for a rainy day.
However, there are other uses for spare capital. For instance, you might consider putting it back into your business in the hope of letting it grow further.
Of course, this comes with some risk, so you should seek some business advice before you take the plunge.
If you’re thinking about taking your business to the next level, talk to our business financial team about whether now is the right time.