Business expansion is a goal most CEOs and business owners perpetually have on their minds. After all, growing is the only way to stay competitive and continuously generate income.
Most businesses usually face the challenge of finding funds for this expansion. So, let’s take a look at different ways you can source new capital to help your company thrive.
Unless your business requires a very large sum, you may be able to bootstrap it yourself.
If you have a savings account, property, bonds, or stocks, you may be able to turn them into the capital you need to get your business off the ground or expand it.
While this tactic naturally comes with some risks, it’s actually a great way to show potential future investors how much you believe in your idea. If you are able to put your money where your mouth is, you will also be much more invested in the success of the business.
Even if you don’t have the money right now, you can consider creating an investment portfolio today that will help you expand your business in a few years. Consider investing in stocks that offer dividends as they will provide a steady income into your business every year.
Crowdfunding is becoming an incredibly popular way of launching and expanding businesses. The internet has given everyone the opportunity to share their ideas with the world and attract the attention of their target audience.
Crowdfunding works because it requires a large number of people to invest a small amount, which is usually easier to achieve than convincing a few people to invest a large sum. It also lets you test the waters and gauge how much interest there is in your product or service.
If you do decide this is the way you want to funnel new capital into your business, make sure you invest a lot of time, research and creativity into the campaign itself. Do all the market and audience research you can, and write a pitch that your future clients and customers will want to read. Sell them the idea as you would sell them the product. This will also help you make more of a name for yourself and help you reach new audiences.
The best place to start looking for a loan is usually among your friends and family. Much like crowdfunding, it can become a way for you to gather small amounts from a large number of people. This funding option will also work better if you need to raise a relatively small amount, as you can often get away without paying any interest back.
Be very careful, though. You don’t want to ruin any of these relationships, so be very clear about the form of the loan. If people are lending you money, agree on a repayment plan and any interest, and write everything down. Make sure to document every payment.
You can also agree to give your friendly investors a share of the company’s earnings. Only do this if you are certain you can pay them back, as you don’t want your family to invest in a business that is likely to go bust in a couple of years.
You can, of course, also go to a bank for a loan. A small business loan will usually require you to be in business for over two years and to have a steady annual revenue. If you don’t meet those criteria, you can look for a loan online as well. Make sure you only work with reputable companies and carefully research them before opening the lines of communication. If it sounds too good to be true, it most certainly is.
Finally, you can also look into angel investors or a venture capital investment. Know that these investors will often expect you to jump through certain hoops and that some of them will want to have a direct say in how you run the company.
This is the best way to generate a large sum of money. However, be sure to read all of the fine print and to have a really good lawyer in your corner. A trustworthy legal professional will advise you on the best way to formulate the relationship with your future investors.
Take your time choosing the people whose money you want to take. If you click well with them and their team, chances are you will have a much easier time working with them down the line.
Before you start considering any of these ways to generate and attract new capital, make sure you’re clear about where you want to invest it. Without a business plan and a carefully mapped out strategy, you won’t be able to make good use of the funds you do generate.
