Getting Growth Capital
Your Company Needs Money to Grow !
How do you get the money?
You have a thriving business and you have a good product. Your widget factory is running efficiently and your have your costs under control. You’re making profits and you want to double your production. But your profits don’t generate enough cash to build a new or larger facility.
Profits Rarely Enough to Grow
Of course, your profit
margins are not enough to build and grow. Unless you are in high price and
a low cost business, you will need an influx of cash to grow. In other
words, you need to get an investor to supply the funds. There are several
ways to get the cash: Debt?,
Equity ?? Do you seek a partnership, a joint venture?
…How do you find
investors?.....Should you buy out an existing firm?
Getting a Loan…Establishing a Debt.
If you are a small business owner, you might decide to take out an SBA loan. The money is available but you will need a business plan. (see my business plan outline) The money to meet your goals is out there, but you have to find the “win-win” solution. You “win” and your investors "win". Note: The SBA has no money; they arrange with a bank for your funds. The SBA guarantees loans.
Selling some of your Equity
You could sell some of your stock (Corporation) and raise the capital (sell equity). You would, in essence, have a partner or several or many. These partners could be individuals or members of a private investment club. Partnership: You would retain “controlling interest” which is more than 51% of the stock issued when you incorporated. They would share in the profits in the form of dividends or through other perks. You continue to operate the business day to day.
Buy Out an Existing Firm
Believe it or not this is probably one of the easiest ways to grow your business. That’s right…Buy out your competition. Like you, they have steady customers and manufacturing facilities . You may find that your competitor is willing to sell you his business and client base, you may even get an experienced worker (him) to run his "division" (ask your gut, first) or transition the facilities into yours. The added revenue stream should cover the purchase loan and his salary. Banks (SBA) prefer Business Plans that propose a buy out of an existing successful firm. (You’ll need a Business Plan)
What About Future Growth
Investment?
Keep in mind, this is not the last time you will need cash to grow your business. The above solutions have implications for your future need for funding. Talk to someone about your plan!
We believe that all sides of the
deal should be happy.