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Most entrepreneurs will need to have a plan for generating funds for their businesses. Opportunities for growth may need to be seized as and when they come along – and, for that to happen, you need to feel confident that the business has the funds to do so.
Moving to larger premises, investing in better and more efficient tools or resources, growing the workforce, or bolstering stock levels all require investment – which means that, unless you’ve got the personal funds to back it, your business needs investment too.
Below, we look at some of the most common – and reliable – avenues to explore if you’re looking to acquire funds to grow your business. Each one poses its own pros and cons to businesses, so it is important you talk through your options with an experienced corporate solicitor before you make any decisions. You can click here to find out more about how a corporate solicitor can help you to reach a decision to grow your business.
How to Raise Funds for New Business Growth?
Bank/Finance Loans
This is one of the most ‘traditional’ ways to secure funding for your business. The main benefit is the fact that banks will not interfere with the running of your business, or request any stake in its success, provided you stay on top of repaying the loan and any interest it accumulates. You can also feel assured by the reputation they have built with their customers over the years.
The main downside is the time it can take to secure a loan. Bank loan applications are notoriously lengthy, and may set your business back.
Investors
Investors are always looking for promising new businesses to invest into, and every sector will have its fair share. One of the biggest benefits to working with an investor is the potential for mentoring – particularly useful if you’re still new to business ownership. Alternatively, you can choose to work with a silent investor (also known as a sleeping partner), and this will mean you retain more autonomy over the day-to-day running of the business.
Business Grants
Grants can be the ideal solution for fledgling businesses, with the added benefit that securing that first grant can make it a lot easier to find and secure additional grants. It can also help to get your name out there, and make your business feel more credible even in those early days.
Grants are, of course, incredibly competitive. Pinning all your hopes on a business grant can be a risk, since so many new businesses chase after prestigious grants each and every year.
Crowdfunding
Crowdfunding has grown significantly in popularity over the years. It’s great for generating funds for business growth while also garnering a strong customer base who feel passionately for your business, and invested in its growth. It is, however, not always reliable, and some businesses will find crowdfunding significantly more profitable than others.
You also need to be wary of idea theft, which can be devastating if your business is still working to get off the ground and establish itself within its market. What’s more, crowdfunding sites can put users at risk of opportunistic scammers.
Restructuring
Rather than sourcing external funding, it may be the case that restructuring your business is perfect for boosting its finances, and minimising its outlay. Why? Because restructuring is often ideal for making a business more tax efficient, and reducing operational costs by pairing the business back to its fundamentals.