Financing Your Growing Business - Part 1 - Getting Started
This is the first post in a three-part series this week on how to obtain private sector funding for your growing business.
Are financial limitations preventing your successful business from moving forward? If your business has reached a stage where an influx of cash is needed in order to finance growth or expansion, it is time to plan out your strategy towards obtaining funding. Our guide on Steps to Growth Capital can help you chart your course.
What are your needs?
Operationally you are doing well, but an infusion of cash can help you take your business to the next level. You may need more capital to:
- Handle day-to-day operations
- Take on more orders than your current cash flow allows
- Cope with quick growth
- Develop or launch new products
- Add e-commerce or an online component to your business
- Upgrade your marketing and promotional activities
Determine your financial needs by producing a business plan that will make your goals clear, as well as the steps you may take to reach them. How will your business perform once it has the funds it requires? Seeking external professional advice to help produce a detailed plan can help ensure your output includes the necessary financial data.
What types of funding are available?
If you cannot obtain working capital by tapping internal sources or standard lenders such as banks and other financial institutions, it could be time to explore private sector financing or various external risk capital investors. These investors, who will purchase equity shares, include:
- Angel investors
- Venture capital firms
- Institutional investors
- Dedicated growth capital firms
It can be expensive to enter into financial partnerships with such sources. Because they take on more risk, these growth capital investors will want a higher financial return and a certain degree of involvement in your business. You will want to determine your comfort level with the costs and the matter of relinquishing some control.
If you are willing to take on the challenges associated with obtaining growth capital in order to ensure the success of your business, the next step is to develop a strategy to woo potential investors. We'll take a look at this in our next blog post. In the meantime, consult our guide on the Steps to Growth Capital to start building your business.