Looking For A Business Expansion? Know These Costs Before Setting Your Budget

One-time Costs

• Office Space: 

When you plan business expansion, the first step is to buy or rent new office space. However, your expenses will not end here; you will also need to spend on the office interior, new furniture, and office equipment such as printers and computers. Thus, before applying for a business term loan, make a list of these expenses as well.
 

• Equipment:

If you have a manufacturing business or own a factory, or a hospital, expanding to new locations necessitates the purchase of new machinery and equipment. You will blow your budget if you don't factor these costs into your business expansion strategy. Equipment financing can help you a lot in dealing with this expense. 
 

• Websites:

It is critical to have a professional-looking website if you are expanding your business and want to reach a worldwide audience. As most customers conduct their research online, websites are their first source of interaction. Spending money on a website is worthwhile. Therefore, don't forget to factor it into your loan for business expansion application.

Also Read: All You Need to Know About Business Loan Interest Rate 2021
 

Recurring Costs

• Research Expenses:

The business environment is dynamic. The taste and preferences of the customers change every six months. Therefore, you must keep up with the trend by researching customer behavioural analytics, market research, trending technologies, and so on. Including this expense on your list can assist you in efficiently utilising your business expansion loan.
 

• Inventory: 

If you are in the business of restaurant, departmental store, wholesale, or manufacturing, you will almost certainly require inventory. However, purchasing inventory can be costly. Furthermore, if you do not properly manage your inventory, too much stocking will increase your cost while too little inventory will result in customer loss. Therefore, while preparing a business expansion strategy, don't forget to add inventory expenses to your list. 
 

• Insurance: 

Insurance is vital to safeguard your business assets just as it is to protect your personal assets and health. Investing in a business insurance policy is a wise decision. You must also renew it regularly. Therefore, you must consider this expense while applying for business expansion loans. 
 

• Advertising:

If you don't advertise, how will people find out about your company or your products? Without marketing, you won't be able to make sales. Therefore, when applying for a business term loan, consider advertising costs such as print ads, PPC advertising etc. 
 

• Payroll:

If you own a business, you can't achieve your objective single-handedly. You will need more and more manpower at every growing stage of your business. When you are applying for business expansion loans, make sure the loan amount is sufficient to meet the salary of your employees in the event of an emergency.
 

• Utilities: 

Your office or factory setup expenses also include utility expenses such as electricity bills, water taxes, mobile expenses, internet bills, and so on. When applying for a term loan, factor in such costs as well.  
 

• Consultation Costs:

There are some areas where you might not hire permanent employees. For instance, you might hire a Chartered Accountant for tax advice, and you might also need a business expert consultant at some point. All of this consulting comes at an extra cost. As a result, remember to include them in your business expansion strategy.
 
Now that you are aware of business expansion costs, you must be wondering what is the maximum business loan amount you can get through a small scale business loan.

Also Read: Get An Instant Business Loan. Find Out How?
 

How Many Loans can a Business Take?

Business loan amount completely depends upon your business profile. To determine the loan amount, you must check the business loan eligibility and documentation on the website of your preferred lender. Also make sure, that your credit history, debt-to-income ratio, and few other influencing factors are in line. If you are applying for a Hero FinCorp business loan, you can get a loan ranging from Rs 5 lakh to Rs 25 lakh.
 

To Conclude

Before you expand your business, you should carefully analyze the business expansion costs as well as the challenges you may face. As a thumb rule, whenever you apply for a business expansion loan, list these expenses in your budget. Being realistic about the amount of money you require and precisely evaluating your business costs will go a long way in helping you succeed.