How do you fund growth without giving up your company?
Growth capital is designed to facilitate your company’s accelerated growth through expanding operations, entering new markets, or consummating strategic acquisitions. The question that follows any expansion is how to fund it?
In your case, it will important to retain control over the business. For that reason many of the existing funding options aren’t viable as they require you to sell a large portion of your business. Therefore, in this post we evaluate those funding options where you can still retain control. Keep in mind, that these options don’t work for everyone.
- Take pre-orders for your items that you intend to sell. Make sure you follow the law. When selling items as a pre-order, you are not supposed to capture the payment immediately unless the customer fully understands that they are purchasing a product or service that will be delivered at a later date. However, you may also authorize the payment without capturing the funds immediately. This would allow you to capture payment at a later date, when fulfilling the order. If you sell on a website, this option might be available for you.
- SBA loans – You need to check if you are eligible for a small business loan.
- Focus on optimizing your cash flow through being a decent supplier and a decent customer. Get your customers to pay you in 30 days, negotiate 60 days with your suppliers. Be religious in doing it on time and getting them in on time. In fact, option (1) is all about having your customers pay now for a product you will supply later. Suppliers will understand and so will customers, if you tell them an honest story. Free cash flow is an underrated instrument for financing growth.
Choosing the best alternative depends on your company’s capabilities. If you can manage to create an amazing promotional video, then use Kickstarter. However, if there is already demand for your product and you don’t have a platform to sell it, then an eCommerce platform that is able to hold that payment until delivery is your best bet.