Every entrepreneur out there wants their business to grow exponentially, but in order to grow, you need to invest funds in marketing, development and other phases of the business process. Finding the funds to finance the growth of your company will be one of the major challenges you will face as a business owner.
There are various methods to get the funds and while some will come at great risks other may take longer time but require few risks. Some of the common methods of business growth financing are:
– Bank Loans: Banks are often all too willing to offer loans for business growth. If you are a small company or an upstart you may have simply taken a line of credit loan, but as you grow and need greater funds installment loans will become a part of your business reality.
Do not be afraid of loans as a business owner. Simply think hard about what kind of a loan you are looking for and be realistic about your expectations. Be careful not to overextend yourself. Taking loans from a bank is of course, one of the riskier ways to finance your business, but will also usually be the fastest.
– Venture Capital: Venture capitalists have become somewhat of a legend in the modern era. These people inspire awe among the businessmen and peaking the interest of a VC will certainly be a great achievement for your business. These people are able to invest big sums of money into businesses they believe can succeed and will usually ask for equity in the company in return.
Selling equity to a VC will be far less risky to yourself and your business than taking a loan from a bank, and if the plan fails, you will not be left in debt, as your investor is the one who will take the hit. Pitch your business ideas to a VC and you might just get lucky.
– Internal Funds: Using your own company’s funds to finance its growth is probably the safest way to grow. While this method will often take a lot of time, it will enable you and your partners to keep all the equity in your company and not pay interest to a bank. Reinvest your money into the company and watch it slowly grow.
Before you choose the type of financing for your business think about what direction you want to take your company in and what kind of realistic expectations you can expect in the future as these factors will greatly influence the right decision for your specific business.