It is one thing to start a business, it is another to keep it running and it even gets trickier when you want to expand or grow your business. Whether it is a startup, business sustenance or expansion, you will need some sort funding.
However, raising money for your small business expansion is supposed to be easier than when you wanted to start. The reason is because at the point of growth, your businesses have garnered some level of success and trust.
It is important that you understand that you are expanding on a familiar niche. It becomes very challenging, especially in getting funding, when businesses venture into new and unfamiliar business climes in the name of growth.
Your objective needs to be clearly defined per time. That will make it easier to raise money for specific purposes like business expansion. Below are 5 ways you can raise money for your small business expansion.
1. Personal Sources
Frankly speaking, before you think of startup, you should also think of growing your business and make plans for that too. Irrespective of any other source you might possibly get funding from, you should have something to start with.
Fact is, the level of your personal commitment to the growth of your business shows how you are personally determined to successfully grow your business.
It is the benchmark that other sources hinge their input on. Nobody will commit money to your business expansion plan if they do not see the percentage of your personal finances going into it.
If your savings will not carry your expansion plans, you could take out a line of credit or make mini acquisitions off your personal loans. It is dicey, but something should come from your end to show commitment to your expansion project.
2. Bank Loans
Sincerely speaking, this should not have made the list considering how stringent it is for small businesses to access bank loans these days. Notwithstanding, small business owners are getting loan for business expansion.
You need to make your business credit worthy as the processes of obtaining a business loan from banks are way too rigorous. Your strategies need to be up on their specs if you will be considered by a bank or even any other financial institution that gives loans for small business expansion.
There should be a clear cut comprehensive and concise expansion plan that will show the bankers that you know exactly what you want. Specifics would be an added advantage. Be clear in the kind of expansion you are doing; opening a new outlet, increasing stock and all of that.
Do not forget, your documentations must be accurate and properly arranged. Your loan officer should not have difficulty understanding your paperwork during perusal.
This is more like asking for money on the street. Do not feel bad just yet, this has some dignity tied to it. By street, I mean a public website where you get to explain your project (say your small business expansion plan), in the hope that people will rally round it and raise you some money.
However, you do not just come out of the blues and launch a crowdfunding website and expect to hit your mark just like that. You need to strategize your crowdfunding if you are going to taste success out of it.
Start by building a crowd first. If your business is one that has wide acceptance, you are most likely going to succeed in your crowdfunding campaign.
4. Angel Investors
There are people out there who derive their utmost satisfaction in seeing businesses succeed. These people invest their own money just to see you grow your business successfully, not necessarily for the profit they will make.
The money you get from an angel investor can come in the form of grant. You might not necessarily pay back the money, but the investor monitors to see that you judiciously used the funds for the successful expansion of your business.
There are also angel investors that will demand some level of ownership rights to the business where they will have a share in the profits of the business. If for any reason the investment goes south, they will not lay claims on their initial investment.
These angel investors can be found in your professional or business network. There are also angel investment companies that you can contact with your business expansion plan.
5. Trade Credits
If you are looking to increase stock, equipment or machinery, you will need money to acquire them before they can begin to make more money for you. What if you get them on credit and pay at a stipulated time?
Yes, you can get your suppliers to give you more products or materials on credit while you pay later. That way you get to pay when you have expanded and made more money.
The downside to this option is that you lose out on any discount you would have gotten for paying outright. Worse still, there could even be accrual of interest on the cost of the machines. Other than that, this is a viable option for expansion.
Richard Agu is a researcher, entrepreneur and freelancer, passionate about entrepreneurship and self-development. Currently, Richard writes for Entrepreneur.com, Goodmenproject.com, among others. Follow him on Linkedin.com by clicking here now.
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