Many entrepreneurs live by the belief that if an establishment doesn’t grow, it dies. Expansion can do a lot for the bottom line including increasing market share, easing out competition or tapping into new available technology.
Many business owners, however, face the challenge of infusing more capital into the new venture. If you’re feeling particularly bullish, here’s how you can eliminate the funding obstacle.
Sell business equity
Selling stocks of your business is a good way to generate more cash for expansion. This is very common among larger corporations with high-value shares and a lot of interested buyers. Sources of this type of inorganic capital include venture capitalists, angel investors and initial public offerings.
It’s a good option because it gets the job done without you having to take out a loan. Selling business equity also reduces your own risk having more partners or stakeholders is not, however, without its own drawbacks.
Investors, who will have some decision-making power of your business, will look into your business plan and expect returns on their investment. Since you’ll be sharing profit with them, be sure to do your math right as well to avoid being on the losing end of a partnership.
Go for bank financing
Taking out a loan for a more profitable venture has been a traditional way of funding business expansions. There are many business banks in Minnesota such as Venture Bank, which can be your partner in financing your next big step in business.
The upsides include having cash available for a set period and not having to sell a portion of your business or share any of your profits. Since you used financing for business growth, improvements in your bottom line should be able to cover bank payments plus interest.
The above are inorganic ways to grow your business, which means you relied on external financing to propel your business forward. There are organic ways of expanding as well, which entails using your own resources as additional capital.