Your experience with expanding?

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I was looking for some input on how you have expanded your eCommerce business. I am personally in retail drop ship and have done everything from my bedroom so far and also have done 90% of the work myself. I am profitable and would like to grow my business.

Some things I have debated in my head are trying to get a SB loan and get an office space and hire employees vs. hiring people virtually on oDesk, elance (keep things small)

Try to find an angel investor to bring someone on board who has more experience than me and can help me grow that way.

Try to find a business consultant, someone who has extensive knowledge in eCommerce retails businesses and is paid as an employee only. No equity/exits

Get Does anyone have any growth experience to share?
#expanding #experience
  • The biggest mistake you could make is to get a loan.

    With the high percentage of business ideas failing, I wouldn't think that your 'expansion' idea would be so huge that it will guarantee your loan payments and keep you out of bankruptcy when the creditor asks you for their money.

    It is much better to expand your business debt-free because you tend to be more level-headed about your decisions - more cautious, and more data-driven.

    You tend to make smarter decisions because it 'feels' more like 'your' money.

    The risk feels more like it is yours at that point and when you fail, it's not as bad because you generally have more contingencies in place.

    That is how I have, do, and will expand.

    You only grow when you CAN afford it - not when someone 'loans' you on your expansion.

    I have had many businesses - I have sold many businesses - and I have CONSULTED many business out of debt and those that have NOT taken my advice many time crashed and burned - lost everything - and I just shook my head.

    Don't think your idea as the 'next Microsoft' will guarantee your loan payments forever. Finance your OWN expansion debt-free and you'll be a lot better off.

    And if you're already in debt? Get out immediately.

    -ADE-
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    • Profile picture of the author Daniel J
      Originally Posted by Auctiondebteliminator View Post

      The biggest mistake you could make is to get a loan.

      With the high percentage of business ideas failing, I wouldn't think that your 'expansion' idea would be so huge that it will guarantee your loan payments and keep you out of bankruptcy when the creditor asks you for their money.

      It is much better to expand your business debt-free because you tend to be more level-headed about your decisions - more cautious, and more data-driven.

      You tend to make smarter decisions because it 'feels' more like 'your' money.

      The risk feels more like it is yours at that point and when you fail, it's not as bad because you generally have more contingencies in place.

      That is how I have, do, and will expand.

      You only grow when you CAN afford it - not when someone 'loans' you on your expansion.

      I have had many businesses - I have sold many businesses - and I have CONSULTED many business out of debt and those that have NOT taken my advice many time crashed and burned - lost everything - and I just shook my head.

      Don't think your idea as the 'next Microsoft' will guarantee your loan payments forever. Finance your OWN expansion debt-free and you'll be a lot better off.

      And if you're already in debt? Get out immediately.

      -ADE-
      First of all, congratulations on maintaining a profitable drop-ship business! This is no small feat and deserves to be commended! The model I use is a bit different from yours, but I too came to the point where I wanted to expand.

      Above is some fantastic advice from Auctiondebteliminator. Expanding a business is important, but only when you've maxed out what YOU are able to do AND when it makes sense financially to do so.

      I personally have hired a local guy to handle shipping and also some sourcing. This made sense for my business to help me focus on building existing brands and product lines as well starting new ones. I was also at the point where the benefit of hiring outweighed the cost (and that aspect of the business was already incredibly profitable)

      The first question to ask is why you want to expand? For instance, what advantage would office space have for you? Would you house some of your best selling products to maximize your profit margins? Would it bring in more customers or sales? If so, how?

      I will assume you are at the point where expanding makes sense. The next question to ask is what tasks could be handled by others and will maximize your time and profits? Hiring a consultant is a great idea if you can do so debt-free, and if you are quite certain that the cost will pay for itself relatively quickly. I hope this helps. Good luck to you and thanks for sharing!
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      • Profile picture of the author Importexport
        Hi wonderd,

        You are very fortunate to be part of WF where you can get sound advice such as that offered above by Auctiondebteliminator and Daniel J.

        I never expanded my businesses unless I could fund the expansion out of profits. There were times when I was like a dog chasing its tail trying to keep up with orders, but I needed to be sure the surge in business was not just a flash in the pan.

        Once I could see that the increase in sales was being maintained, I then went to the next stage. I know many would not agree with my next step, but I hired family and for me that worked very well.

        The business that grew the fastest was my importing business, and my next expansion stage after I ran out of family members to hire was franchising. To be successful, a franchise system has to operate on very high profit margins, and a dropship business is highly unlikely to meet that criterion.

        However you go about expanding, I would strongly endorse what ADE said about only doing so when you can afford it.

        The other gem in the previous two posts was from Daniel J who asked the most pertinent question: Why do you want to expand?
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  • Profile picture of the author feedia
    Very good comments and suggestions here!

    I once was in your position almost exactly. I was running two retail websites (mainly drop ship), and got a bug to move to the next step. Luckily, it worked for me for a little while, but I grew too fast and made some decisions that eventually put me out of business. Now, this was many years ago already (ok....like 7 years ago), and I am just starting rebuild to the level I once was at.

    My honest opinion, is that if you can support a growth move you make with your profits, and have extra enough saved to sustain the business debt that incurs from it (for at least a year), you may be in a good position to make your move. If you are not quite there, consider an optional way to grow your business that may take much less work and overhead, as a way to finance your future growth.

    Good Luck!
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    Thank You,
    Lane
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