Running a fast-growing business can be exciting, but when you come to a point where you don’t have enough money to expand, it can be challenging. Many entrepreneurs find themselves in this situation, and they don’t know what to do at this point. If you are behind a business that is growing quickly, there are a different options for you to consider when it comes to getting the capital that you need to keep growing.
Hit Up the Bank
One of the most obvious places to go is to the bank. When you need to get money for a commercial project, many banks offer commercial loans. The problem with getting money from a bank is that the lending market is still very dicey. Ever since the financial crisis of 2008, it has become very difficult to get money from a bank for a business. If you are a small business, this makes things even harder. Banks are very hesitant to lend money to small businesses unless you have a very good idea. In order to get approved for a traditional bank loan, you may need to make personal guarantees on the money that you borrow. If your business has a proven track record or large contracts with customers, this can help your chances of getting approved.
Another approach that could provide you with the capital that you need is to sell some equity in your business. This can be done in many different ways including finding angel investors, venture capital firms, or taking on a partner. With all of these options, you are basically engaging in the same strategy. You’re selling a portion of ownership in your business for a large upfront investment.
Selling equity in your business can be a very good way to raise capital, because you don’t have to worry about making loan payments back to a lender. On the other hand, you are giving up a portion of ownership in your business, so you should be careful how much equity you sell. You will have to share profits with this co-owner of the business for the rest of the life of the company in many cases. This means that you should choose someone that you trust to become your business partner. If possible, try to find someone who brings more to the table than just money. If they happen to have business connections that could help out your growing company, this would definitely be an advantage for you.
Improving Your Chances of Success
If you are interested in seeking out business funds from a loan or from an investor, there are certain steps that you can take to improve your chances of success. Start out the process by creating a business plan that you can show investors or lenders. In this business plan, provide information about your specific business strategies that set you apart from the competition. Do some research into the market that you are operating in, so that you can show them why you are better. Include financial information such as a balance sheet, income statement and statement of cash flow. When you do a good job of per trading your business in the form of a business plan, it will improve your chances of getting the money that you need.
Doing the Deal
Once you have located an investor or a lender to work with, make sure that the terms of the agreement are to your liking. Don’t give away too big of an ownership percentage for a small investment. It may be tempting to sell yourself short just so that you can get your hands on the money. Avoid the temptation and get all of the money that you deserve to grow your business.