Finding Money to Expand and Grow Your Business
Growth is the key to building a healthy, sustainable business and usually that involves finding money, and sometimes, quite a lot of it. But to grow, organisations need to locate ways to expand their business operations. Improving an existing product, adding to the size of your staff, and launching a new product line are popular choices. Another option that can help you grow your business is to increase your number of business locations.
Each of these ideas for expansion all require significant funds. Coming up with the money to expand is a challenge for any business, especially a small to mid-sized one. The following are a few strategies to help you find the money to develop and grow your business.
Cashing in Savings and Applying for Loans
One way that business owners can locate the money they need is to cash in their savings. They might also sell a personal or business asset, or apply for a loan. While these are popular choices, each features a number of drawbacks.
One significant drawback is the fact that loans must be repaid over time. Also, you need to take into account the crippling rates of interest charges which can seriously impair your business growth.
Cashing in savings, or even selling a personal or business asset, can also affect the owner’s ability to be flexible. It can also make it more difficult to take advantages of deals that might lower the overall cost of production.
Angel Investors and Venture Capitalists
TV shows have popularised the concept of venture capitalism, but angel investors have always existed in some form. Businesses that are strapped for cash to expand, search for an individual or individuals who have money to invest. It is a partnership of sorts with the investor offering cash in exchange for a percentage of ownership in the firm.
While taking on a partner can help companies find the money, it also means that they have less control over their enterprise. As long as both the owner and investors all agree, this won’t be an issue. But, should the partner decide to take the company in a new direction, it can lead to the closure of the business.
Finding Money to Grow your Business
While using social media to solicit donations may be last on the list, that doesn’t mean that it should be ignored. Crowdsourcing sites such as GoFundMe aren’t just for individuals seeking help to pay bills or raise tuition money. Indiegogo is fast becoming one of the most popular sites where businesses seek donations to support their company. Often, businesses will offer specific perks such as advanced shipping, and a substantial discount, once a new product is released.
Other sites, such as Patreon, cater to creatives such as artists, musicians and authors, who offer rewards for donations. Examples of typical rewards include autographed copies of their work, free t-shirts, advance copies of their newest book, paintings, or other branded promotional items that are only available to fans who contribute through the platform.
Finding money is not easy. As crowdfunding is gaining in popularity, it allows businesses to raise the funds that they need to expand without taking on a lot of risk. It also lets businesses raise funds from donations without having to convey ownership in the business in exchange. The business owner remains completely in control of the company.
A crowdfunding campaign is also an additional way to generate a lot of media buzz and draw public attention to the business. Ultimately crowdsourcing is an easy to use, cheap, and effective tool that bridges the gap between the finance side of the business to the branding of the company.