Whether you’re thinking of selling now or in 10 years, here’s practical advice to boost the value of your business.
Expanding a business
In this episode of Kochie’s Business Builders, NAB's General Manager Direct Business Craig Swinburne, talks to Max from Tukk & Co about how to know when it’s time to expand a business.
Successful sea change sees Max Li looking to expand, but he can’t do it alone.
As an experienced design architect, Max Li quickly became a coffee aficionado immersed in the fast paced cultural pulse of Melbourne that merges artful design with great brew. His attraction proved so strong that he yielded to the impulse of opening his own coffee house in the burgeoning corporate precinct of the Docklands.
The vision of Tukk and Co was to offer coffee drinkers a range of blends that would expand their palate while also providing great café style food within a beautifully designed space.
With self-confessed “zero experience” in the hospitality industry, Mr Li leveraged the relationship with his bank NAB, to assist in getting the business off the ground and to grow it steadily. “Coming from a design background I have relied on the people around me to help me learn and NAB has played a crucial role for a small business starter like myself,” he said.
While still in the early stages of establishment, Mr Li has implemented business software to track performance which reveals steady growth. “We would like a 100% satisfaction rate for coffee drinkers,” he said. Given Tukk and Co’s success, Mr Li is currently assessing expansion. NAB’s General Manager Direct Business, Craig Swinburne advises that for any small business looking at expansion the 12 month mark is a good point to assess next steps. Mr Swinburne suggests that impetus to expand should be based on instinct, balanced by research.
Mr Swinburne also flags that expansion needs to be predicated on how viable it is to replicate the formula and assess how much time and capital that will take out of the existing business.
Central to elevating to the next phase is keeping an eye on cash flow and how it will work with two businesses operating in tandem, adds NAB Head of Micro and Small Business South, Tim Armstrong.“Cash flow is critical to business. So if you are looking at setting up a new business, you need to look at how that could be a drain to your existing cash flow and assess accordingly before you think of future expansion.”
Consider this RECIPE to know when is the right time to expand your business:
Replicate - Determine the unique factors that are working
External factors - Be aware of external factors that influence growth
Cash flow - The key to success is the ability to manage cash flow
Individual - Never underestimate the power of the founder
People - Great people are vital to sustaining your business
External advice - Do not underestimate good legal and accounting advice