Growth is always essential for the existence of a business. It will start seeing failure if it does not try to expand its activities. The entrepreneur is an endless challenge seeker. But to expand a small business, an entrepreneur needs to keep various factors in mind such as finance, logistic and his or her emotional readiness. There should be a field of opportunities which can be benefit the business. Expansion is one of the most daunting challenge a successful business will face.
A successful entrepreneur will make sure there is a constant flow of new ideas and a commitment to try out at least some of the new ideas. He or she has a dual role to play- a) that of a leader, b) that of a manager. A leader guides and energises while a manager processes the input and gives the output. To ensure the continued efficiency and profitable functioning and growth of enterprise, extra managerial ability is required.
There are two ways in which expansion can be divided.
- Internal Expansion: It results from the gradual increase in the activities of the enterprise. It might expand its production materials like adding more machines or by replacing the old ones with the new with higher capability to work. Expansion can also done by entering new fields of production and marketing. It can be done by taking more loans or from tbe old profits. The main motive is to increase the business activites and broadening the present capital structure.
- External Expansion or business combination: External expansion refers to business combination where two or more companies combine to form a single one. They do it for the purpose of strengthening certain fields or to have a support so that a company don't fall down because of its adequacy. Or for mutual benefit and maximum profits. It might also be for expanding the fields of activities which will give the company a new glow.