Scaling up a small- or medium-sized enterprise (SME) or startup is an exciting step for ambitious entrepreneurs. It takes a lot of hard work to arrive at the point where scaling up is possible, and as an entrepreneur, you’re likely looking forward to the revenue potential and other business opportunities that the process may bring.
However, safely scaling up a business requires meticulous financial planning to avoid over-expansion and other risks. Let’s explore seven crucial financial considerations tailored to Philippine entrepreneurs who are eager to expand their ventures.
1) Available Working Capital
Before you scale up, you must analyze your current cash reserves and short-term assets to determine if they are sufficient to support the initial stages of expansion as well as your ongoing operations. If your working capital and cash flow are insufficient, explore options to secure additional working capital through business banking loans, lines of credit, or other financing methods.
2) Funding Options
In the Philippines, SMEs and startups have access to a range of funding sources, including angel investors, venture capital firms, government grants, and bank loans. Loans for businesses will necessarily come with a variety of caveats, as funding sources usually want to limit their risk exposure. Some loan sources, however, are especially suited for startups and SMEs that want to go to the next level.
Maya offers the features for a business loan Philippines SMEs and startups need. The Maya Flexi Loan is a no-collateral business loan product exclusive to Maya Business users that gives access to up to PHP 2 million in funding, delivered straight to a borrower’s Maya Business Deposit account. With its automatic payments, competitive fees, and fast activation, it’s the perfect loan product for expanding your small business or keeping things running during emergencies.
3) Cash Flow Management Strategy
Even if your business is profitable on paper, a weak cash flow can make it especially vulnerable during your expansion phase. Develop a robust cash flow management strategy so that you can easily meet your financial obligations while continuing to invest in growth.
Keeping your cash flow optimized may involve negotiating favorable payment terms with suppliers, improving your invoicing process with products like Maya Invoice, and refining your payment process with Maya Terminal and Maya Checkout. Any entrepreneur should improve their financial housekeeping processes before they embark on an expansion, so make sure that you’re prepared to do this as soon as possible.
4) Technology Investments
When chosen correctly, technology investments can bring down your production and distribution costs while also making it possible to increase the overall quality of your output. However, the cost of implementing and maintaining different technology frameworks can differ wildly, and not all options might be suitable for your expansion efforts.
Avoid falling into the “fear of missing out” or FOMO trap when investing in new technologies and choose upgrades based on how closely they align with your business goals—instead of upgrading just for the sake of it or because everyone else seems to be doing it.
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5) Talent Acquisition Costs
In startups and SMEs, there is an expectation that everyone will take on multiple roles. While this approach can help your small business thrive in its early stages, scaling a business efficiently will require hiring specialists. This often means hiring people who can do one or two jobs exceptionally well, rather than multitaskers who take on certain areas just because they’re compelled to. While the benefits of doing this are not always intuitive, choosing specialists tends to be more sustainable and cost-effective in the long term due to their focus and generally higher productivity.
To maximize your human resource funding, consider outsourcing anything that your business doesn’t specialize in to experts who already have the existing scale to do what you need. For instance, instead of hiring and developing in-house accountants to do your bookkeeping, consider hiring a specialized accounting firm. This way, you get access to qualified experts at a lower cost than if you hired in-house, and you may also be less susceptible to human error and other costly risks attributed to mistakes or inefficient work done by non-experts.
6) Business Unit Profitability
Before scaling up, you should also assess the financial health of each product or service you offer. Are there certain offerings that generate higher margins or have lower customer acquisition costs? Focusing on your most profitable units will allow you to unlock a solid foundation for sustainable growth. At the same time, consider de-emphasizing or completely removing products with low margins to sharpen your business’s focus and help it expand more efficiently.
7) Timing
There are incomparable thrills to scaling up, and your desire to grow quickly is quite understandable. But it's also essential to gauge the market as well as the risks and opportunities that might come from expanding at a given time.
Scaling too rapidly at the wrong time, such as to capitalize on a fad that has already peaked, can lead to financial difficulties. That’s why you should conduct thorough market research and consider macroeconomic factors that affect your industry to determine the optimal timing for expansion.
Navigate Expansion Safely with Maya Flexi Loan
With a Maya Business Flexi Loan, Maya offers Philippine-based startups and SMEs a safe business banking loan option to support their expansion. Maya Flexi Loan will allow your small business to instantly unlock up to PHP 2 million in collateral-free credit line that can be divided into separate loans. With its borrower-friendly fees and easy payments, the Maya Flexi Loan product is the perfect funding source to help your business scale sustainably. Create your Maya Business account today and start accepting payments to receive your Flexi Loan offer in 3 months
Aside from giving you access to safe funding for your business expansion, creating a Maya Business account also lets you enjoy exclusive offers like the Maya 1-2-3 Grow bundle. Maya 1-2-3 Grow gives you a 1% merchant discount rate (MDR) for QR Ph sales, helping you achieve PHP 14,600 in transaction fee savings for every PHP 1 million in QR Ph sales, three (3) months after promo onboarding.
You can also create and designate a high-interest Maya Business Deposit account as your main settlement account to enjoy a generous 2.5% p.a. interest. Sign up for Maya Business today to enjoy the benefits of a Maya Flexi Loan.
