The stronger the economy, the more options there are for borrowing money and growing your business. This can be beneficial if you find the right source of funding or fairly detrimental if go about it the wrong way. There are several options for obtaining growth capital, and small business owners have to choose what will best serve the needs of their company. As long as you have a sound model for expansion, the following sources can help you get your business to the next level.
It’s not just the super wealthy that can fund a business venture. You may be hesitant to tie up your own money in growing your company, but there are a few reasons to give it some consideration. Many business owners don’t realize how far their money can go, and if you just need a short-term investment to increase inventory, you’ll likely be able to pay yourself back relatively quickly. More importantly, potential investors are less likely to advance you money if you’re not willing to fund your own operation.
While the downside of an investor who’s looking to get paid in equity is that you lose shares of your company, the upsides likely outweigh that one snag. Whether you go through a firm or an individual investor, pairing your business with a person who can offer finances as well as advice can greatly improve your chances for successful growth. Venture capitalists only invest in companies they believe in and are therefore willing to help with the development of your business.
Depending on how much you’re looking to grow, a business credit card might be the ideal source of growth capital. If your expenses are primarily short-term and there won’t be an extended period between expansion and increased revenue, you can fund the venture with credit and not have to deal with any extended loan terms. You’ll also benefit from smaller monthly payments and the ability to draw as much or as little money as you need at any given point. It’s important to stay diligent with paying down your balance so as to not hurt your business credit. As long as you’re responsible, a little piece of plastic might be enough for you to grow on.
It’s hard to determine how much growth capital you’ll need until the business starts growing. Expansion doesn’t come cheap, so if you’re looking to develop your small business into something bigger, do the research and figure out what companies are best suited to help you achieve your goals.