Top 6 factors Affecting for Business Expansion
Factors affecting business expansion:
The expansion in a business brings several benefits for owners
and customers. The expansion also results in bringing more profits to a
business concern. However the expansion of the business depends on several
factors as discussed below:
i.
Profit Expectations:
The first factor to be
considered while expanding a business is the profit expectations that a
business might expect from expanding its operations. The prime motive for
expanding a business is the forecasted revenues that business might generate
over a period of time.
ii.
Customers Demand: The second factor that affects the decision of a business to
expand its operations is the demand of the products of the business in a
particular market. The customers demand in market may be in the form of
unfulfilled needs that are not met by the existing businesses in that locality.
Therefore, a business may decide to expand its operations to fulfill the
required demand from the customers.
iii.
Availability of Funds: The expansion of the business
requires sufficient funds for engaging in the expansion activities. These funds
may be in the form of owner’s capital or the borrowed funds from the bank or
other financial institutions. A business cannot be expanded if adequate
financial resources are not available with the owners.
Iv.
Govt. Approvals: The expansion of the business in the form of exports. Alliance,
combination etc.
usually requires some form of Govt. approvals.
These Govt. approvals are prerequisites for undertaking any business expansion
activities. To get these Govt. approvals certain formalities are required to be
performed by the business.
V.
Presence of Human Resource: A business cannot successfully
function without the presence of trained and skilled workers. The expansion of
a business also requires hard-working and dedicated employees who can work
jointly to attract maximum consumers for buying the products of the business.