Your small business is ready to head into its teenage years, but you cannot afford adolescent mishaps. Your goal to become the next Jeff Bezos will never be realized if you do not plan for innovative growth that is designed for success. This goes beyond the business plan you wrote to secure your startup financing. This is serious planning that tests the limits of your presence within your niche and blows away your competition. How do you secure the funding and guidance to grow your business into the next Amazon? Here are six options of which many business owners take advantage.
#1. Angel Investing
An angel investor is a single person (or it can be a group of wealthy people) who wants to put money into your business. He, she, or they will discuss your growth plans with you and then decide the best route for you to take. He, she, or they may give you money toward that growth in exchange for a stake of your company profits, or the angel investor may also opt for a stake in your company ownership until the growth is achieved. If you want the help, adding experienced ownership and management might be beneficial, as the angel investor has already grown toward his or her success.
#2. Asset Bootstrapping
If you feel you have the growth plan under control, you can bootstrap your own assets and put them toward your company. Asset bootstrapping is a simple term that means you take your liquid assets and turn any illiquid assets you need into cash and then use that money for your business’ growth. Assets can include any credit cards or lines of credit you may have or taking out a second on your home or business. Liquid assets are the cash assets you have; illiquid assets are things you’d need to sell. Do you have extra property and a boat that you never use? Sell it all and put that money toward your business.
If you’re looking for donations toward your company’s growth, you might consider heading to a business crowdfunding website and setting up a campaign. An example of personal crowdfunding is GoFundMe, and business crowdfunding works in the same manner. You would describe who you are and what your business does, and then explain your growth plan and how it will benefit your business, its customers, and the economy. Those interested will give – yes, give – you money toward your growth goals. You won’t need to pay the money back, but bear in mind crowdfunding isn’t guaranteed.
#4. Personal Lending
Of course, you can also rely on your family and friends for help if you prefer, and you can set their funding up like many of the options already discussed in this post. Perhaps your father would love to invest in your business but not take an active managing role because he’s retired; he just wants a percentage of the returns as your company grows. Your friend, however, has the extra cash and expertise to help you in your niche. He’ll help guide your growth. Finally, your grandmother will just give you a cash gift. There, you have two angel investors and a crowdfunder.
#5. SBA Lending
The U.S. Small Business Administration also has many grant and loan programs to help small businesses start and grow. If your business qualifies, you may be able to get your hands on other federal and state financing, as well. Grants are ideal in that they needn’t be paid back; the money is a gift in essence. This being said, the money must be used as designated by the granting agency so your hands will be tied. SBA lending programs offer loans for expansion through several sponsored financial companies and the money’s usage isn’t as limited as it would be if it were a grant.
#6. Venture Capital Financing
Venture capital financing has helped many major corporations grow into the world leaders in their niche they are today. Chris Sacca was a venture capitalist until he announced his retirement from investing in 2017. Sacca helped companies like Instagram and Twitter become social media giants, although many would argue that some people need to stay off Twitter. Chris Sacca’s wife works in advertising, and the two were and are a powerful force in growing businesses. Venture capital investing helps companies by providing cash and growth guidance through innovation and invention.
These are just six ways you could finance your business’ growth. Other options include accounts receivables and purchase order financing, bridge loans, and peer-to-peer lending. The most important thing is to ensure you have a full-proof plan for your business’ growth before you seek out funding. If you cannot show a history of past successes coupled with a solid plan of where your business will be in three to five years, you will find it difficult to find anyone interested in helping you. Make certain you know how to grow your business before you look to someone else to finance that growth.