Where Can You Find the Growth Capital Your Company Needs?
Money is the life force of any business. In order to survive, thrive and grow, your business will at some point likely need an infusion of cash. For successful enterprises, this need for funding usually comes when it is time for the firm to expand is some way. Whether you need to add new personnel or equipment, seeking a source for capital will at some point occupy your mind. There are probably as many methods of raising growth capital as there are for startup money. Having an existing business that is operating properly often puts you in a better position to raise money than a beginner.
One of the common ways that businesses find growth capital is through individual investors. These investors are usually just people with a little extra money they want to put to work for them. Oftentimes, individuals are easier to persuade to consider new or unproven business concepts. For expansion, you need to make the case that your growth plan is sustainable and going in the right direction. Also, predetermine how much influence in running daily operations the new funding source expects to have. If the investor is too hands-on, some business owners may decide to keep looking for alternative sources.
Venture capitalists have money to lend to promising businesses looking to expand. If you seek out these groups as a funding source, expect then venture capitalist group to scrutinize your business and your personal finances. The people who start these groups are typically experts in business and finance. They are usually too busy spotting potential winners to waste time with questionable backgrounds. Make sure your personal and business credit history and financial statements are in top form before approaching venture capitalists about growth capital.
One old-fashioned way to fund a business expansion is for the owner to put up the money. Sometimes referred to as “sweat equity,” money earned from a profitable endeavor being re-invested for more profits has a nice ring to it. Sometimes, a good strategy involves putting up some of the needed funds yourself and seeking additional investments from groups or individuals. Many investors will see the fact that you believed in your business enough to put up your own money as a sign of good faith.
Finally, seeking growth capital in the form of a traditional bank loan is a time-honored method. If you have excellent personal and business credit, your chances of acquiring some funding this way is high. However, incurring debt is a major decision that requires careful consideration. Proceed with caution and make sure that you do not take on more debt than your business can handle.