Plan your business's growth

Growing your business usually means one or more of four things. You take on staff, move to bigger or extra premises, change how your business is set up, or bring in money from lenders or investors. Each can help you grow. Each also brings new costs, and some bring legal duties that start at a set point.

This guide helps you decide whether you are ready, choose how to grow, and see which rules will apply to you as you do.

Check you are ready to grow

Growth uses cash before it brings it in. You pay for staff, stock, equipment and premises before the extra sales arrive. Many businesses that fail while growing were profitable on paper but ran out of cash.

Choose how to grow

There is more than one way to grow. The right one depends on what is holding your business back.

• Sell more to your current customers by adding products or services they already need.
• Reach new customers in new places, new sectors, online or overseas.
• Open another site or branch if demand is local and your current premises are full.
• Franchise your business if you have a model that others could copy under your brand.
• Work with other businesses through joint ventures, agents or distributors to reach markets you cannot reach alone.
• Buy another business to add customers, staff or capacity quickly.

Most options work better if you do one at a time and check the results before taking the next step.

What changes when you take on staff

Becoming an employer, or taking on more employees, brings duties that apply from your first hire. You will normally need to register with HMRC as an employer before your first payday, check each person's right to work in the UK, and give them a written statement of their terms. Most employers must also have employers' liability insurance. You must also put eligible staff into a workplace pension.

More duties start as your workforce grows, such as collective consultation before large-scale redundancies and, for large employers, gender pay gap reporting. Check which apply before you reach each size.

What changes as your turnover grows

You must register for VAT once your taxable turnover passes the registration threshold. Watch your turnover over a rolling 12 months, not just your financial year, and plan how you will handle VAT on your prices before you reach the threshold.

If your business is a limited company, its size also decides which accounts you must file at Companies House and whether it needs an audit. Size is based on turnover, balance sheet total and number of employees.

Changing your business structure and funding growth

If you are a sole trader or in a partnership, growth may be the point to form a limited company. A company keeps the business's debts separate from your own, which matters more as contracts, staff and borrowing grow. It also makes it possible to sell shares to investors. It brings more reporting and administration, and different tax rules for how you take money out.

You can pay for growth from profits, by borrowing, or by selling a share of the business. Borrowing keeps you in control but must be repaid whatever happens. Selling shares brings in money you do not repay, but you give up part of the ownership and often some control.

Free advice on planning your growth is available from the government-funded business support service in each UK nation, including local Growth Hubs in England.