1. Read the text and answer the questions. Discuss the answers with your partner.

1. What are usually the main reasons for expanding business?

2. Would you try to expand your business, if you have any?

3. Would you try and finance your growth from your own resources or would you easily increase your borrowings?

4. Would you rather overwork, or would you employ more staff?

5. Do you think expansion is a risky operation? Why?

2. Decide if the statements are true (T) or false (F).

If you want to expand your business, you want to make more money.
You are forced into expansion, because your customers want more of what you are offering.
Expansion often means more profit.
Expansion often means more people employed.
Expansion often means attracting outside capital.
Expansion often means delegating some of the tasks to other people.
Expansion often means running more risk..
Expansion often means developing new products or services.
To have one permanent customer in business is very good.

3.Match the verbs on the left with the nouns and phrases on the right.

to make to be forced into to attract to develop to run to employ to run out to avoid

a) complacency b) of credit c) the staff d) the business e) new products and services f) capital g) expansion h) money

4. Complete the sentences using the words from the text.

1. You expand because your … want more of what you are offering.

2. When I expand, I can … new capital from outside.

3. I would … some of the tasks to other people to save myself from overwork.

4. 'Over-gearing' occurs when a company … too much.

5. 'Over-trading' occurs when … expands much faster than working capital, particularly cash.

6. To avoid any complacency, … new business

Text B.

Diversification

An attractive possibility for many companies is not just expansion of their existing business but diversification - the creation of a new 'parallel' business to run alongside the existing business. Generally, people diversify into areas akin to their existing businesses, where existing knowledge and contacts can stand them in good stead.

This can mean a second stream of profits. The two businesses may be able to share certain facilities, and even personnel, which reduces overheads. Broadening your operation means you can still be profitable even if one of the businesses takes a downturn.

Whatever your new venture, consider it as a completely new business rather than just a sideline. Remember how difficult and time consuming it was setting up your original business. Draw up plans with the same amount of care and detail that you devoted to your first business plan.

Make sure you have the right resources in place, both human and financial. The most common reason for failure through diversification is that companies spread their resources too thinly.

Protect your original business. Ensure that it doesn't suffer because you devote all your time to the new project which may well be more exciting and challenging. If you don't there is a danger that your original business could suffer.

As your business grows, if you are not already trading as a limited company, you can think about changing the status of your business. The main advantage is that a limited company is a completely separate legal entity from its owners. As such, the directors are not personally responsible for its debts. This can be a very important protection as the sums involved in a business, and the potential losses, get larger. You may, however, have to give personal guarantees to the bank, or other lenders if finance is required. The downside is that a limited company involves more paperwork. And directors have greater legal responsibilities.

But, for many people, as their business gets larger the attractions start to outweigh the disadvantages.

Notes: to stand sbd in good stead -придатися, стати у пригоді

downside =disadvantage