You’ve been running your small business for a while now. You’re making a profit and have concluded that it’s time to expand to cater to the needs of a more vast client base. You want to widen your scope, add more employees and make more money. You’re now ready for the next stage in your company’s growth.
The good news is that you’ve already established a business with reliable revenue streams. The bad news is that this expansion will cost money—and lots of it. Other bad news is that you don’t have the funds. But, worry no more. Before your big dreams get dashed by an empty bank account, you can fund your business growth through these means:
1. Take A Business Loan
A business loan can be an excellent way to fund your business expansion. Some banks and lenders are willing to take the risk, given your reliable revenue streams as a small business owner. You, however, need to have some things in mind to kick-start applying for short term business loans.
Start by ensuring your business plan includes all the information for lenders to understand how the loan will be used and repaid. The more transparent your business plan is, the better your chances of approval. You should also find a lender who understands small businesses like yours.
Many financial institutions cater exclusively to large corporations or individuals with high net worth. They pay little attention to the needs of small businesses. So, ask colleagues for recommendations about where they’ve gotten their loans, if possible.
Also, never borrow more than you need because it may put undue stress on you. Finally, always ensure that every dollar spent gets returned before taking another out, no matter how tempting it might seem.
2. An Equipment Loan Can Be Helpful In Large Purchases
An equipment loan is a loan for buying business assets, such as equipment and machinery. For example, you’d need equipment to serve your needs in the new place to expand your business.
You can take a loan to cover the cost to save money on this. This way, you’re not using your funds or a business loan you’ve taken to finance the assets that will help your business in the location. Instead, you’re using another loan to help you iron your finances.
3. Identify Unnecessary Money Leaks And Seal Them
As your business grows, you’ll likely have more employees with their ideas about how to spend your money. Unfortunately, if they don’t have the company’s best interests in mind, they can be a source of unnecessary spending—and money leaks.
Money leaks are expenditures that don’t bring any value to your business or its customers. They take away from your profit margins and can be tough to spot unless you’ve got an eagle eye for detail (or someone who does).
The key is ensuring that every dollar spent contributes directly toward growing revenue or reducing costs. When you spot these leaks, seal them off and stay on top of your finances.
4. Consider Private Equity Although You Might Give Up Some Control
If you’re looking to fund business expansion, consider private equity. This type of investment comes with risks and rewards, but it can be a good option if you want to grow your company without giving up control.
In the U.S., there are two types of private equity: venture capital and buyout. Venture capital firms invest in early-stage companies with high growth potential; buyout funds focus on acquiring mature businesses or taking them public.
Both options provide investors with upside potential and downside protection from financial risks (e.g., market downturns) and operational risks (e.g., poor management). You can consider either of these choices to fund the expansion if you want to keep your business and see it grow.
5. Renegotiate Present Monthly Expenses To Save Cost
The next step is to renegotiate your monthly expenses. It can include the rent of your offices. If you’re at leased premises, you can negotiate with landlords to reduce the rent in exchange for services contributing to their profit. The same applies if you rent equipment, such as printers and computers.
You can also negotiate staff salaries for the time being. While this is a risky move, it’s a way to know members who can sacrifice the present for the future when your finances bloom again. In addition to staff salaries, you may need to negotiate other expenses such as logistics.
You can also consider more energy-saving methods rather than electricity. For example, you can make do with solar systems or use more energy-conserving bulbs in your offices and warehouses.
6. Get Previous Clients To Buy More
You already have a solid customer base. You’re keeping them happy, and they keep coming back to you. You need more customers to grow, and you can use your present network of customers for this.
You can ask your clients to refer your business to their network. They’ve already researched your business, so they know what they’re getting into when they hire your company or recommend it to others. Plus, their opinion carries weight with those looking for similar services or products.
Doing this will expand your customer base and fund business expansion over time.
7. Consider Partnership With Bigger Businesses
If you’re interested in expanding, this may be the right time to look at partnering with bigger companies. It can benefit both parties as they can share resources and establish mutually beneficial relationships.
For example, you could consider selling your products through larger retailers or distributors with more reach than you do. You can also make use of their physical presence in your target location.
The first step is finding the right partner for your business expansion needs. Start by asking yourself what type of company would benefit from working with you. When you decide this, research and shortlist potential partners online or through referrals from trusted contacts. These contacts could be your friends, family members, or people working in similar industries.
You might also want to attend networking events where other entrepreneurs gather so that they can share their experiences. When you decide on the best partner, reach out to them with a flashy offer and negotiate the terms.
There are many options for funding business expansion. While talking with your bank might be a good place to start, it’s not the end. You can reach out to your business partners for help or consider private equity firms helping small businesses grow bigger.
Business expansion is an opportunity to grow and hit new heights, and it doesn’t have to be a challenging process.