Running a business is expensive — especially when it’s still in its initial stages. You not only have to cover all operational costs (which can add up until you start making sufficient profits), but any expansion or new venture requires additional capital.
For many business owners, acquiring that new capital is a challenge. After all, in an economic situation where consumers are trying to spend less and stocks are wavering, it’s only natural that investors are cautious about where they put their hard-earned money.
But running (or expanding) a business during challenging times isn’t impossible. It simply requires you to know what you’re doing. So, whether you’re aiming to launch or expand your business, here’s how you can access new capital that will allow you to do so.
Have a Bulletproof Business Plan
Before applying for a loan or looking for investors, you need to have a documented business plan.
By defining your company’s objectives and strategies for achieving your goals, you will effectively convince potential investors that you:
- understand the market you’re competing in, as well as the competitors you must outperform
- have a defined target audience whose pain points you can solve
- identified product opportunities that will allow your brand to stand out with a unique value proposition
- defined your brand’s identity and voice in a way that will appeal to your future customers
- understand the marketing strategies that will yield the best returns for achieving your goals
- know the importance of a stellar customer experience and are ready to provide it to your brand’s clients
Consider Your Financial Options
Once you have a business plan ready to be seen by potential investors, it’s time to consider your financial options for securing new capital to expand your business.
Generally, there are several possibilities you can explore, each one bringing unique benefits to the table.
Bootstrapping
If you’re not afraid of adopting a hands-on approach, the simplest solution to your capital needs may be bootstrapping. Generally, bootstrapping means that you’re either using personal finances or relying on revenue to fund growth.
The great thing about bootstrapping is that it’s not as impossible to accomplish as it may seem. For instance, something as elementary as following reliable investing newsletters can allow entrepreneurs to multiply their wealth and gain access to valuable capital.
But there are other ways to bootstrap your business as well. Several strategies, like SEO, content marketing, and social media marketing, are DIY-friendly, which means that they cost almost zero money while offering the opportunity to increase the visibility of your business and significantly boost revenue.
Crowdfunding
In some cases, brands can ensure expansion through crowdfunding. With platforms like Kickstarter and Indiegogo, businesses can appeal to people who have unique pain points and are willing to help you turn your idea into reality.
Of course, for a crowdfunding appeal to work (and resonate with the right audience), it must rely on a well-made product explainer video, which is not as easy to produce as it sounds. Nonetheless, if you play your cards right, following this course of action can secure a significant amount of capital in multiple categories ranging from tech to blockchain to publishing to TV to apparel.
Investors
Young companies usually find it challenging to secure funding from traditional sources. This is why finding investors is an excellent way to find capital that will allow your business to expand at your desired rate.
For most small organizations, finding an angel investor will be the goal. These are people who specialize in providing a starting capital to early-stage businesses, don’t mind a high level of risk, and understand that risk doesn’t necessarily mean a potential loss.
However, if your brand is already established and you’re looking for money and guidance on how to grow, venture capitalists will be the option you should pursue.
Finally, as you explore financial options that will allow you to accomplish growth for your company, don’t forget about the people you know — friends and family. If they believe in your idea and product, they may be prepared to make an investment that will allow your business to achieve the desired rate of growth, which will bring them the potential to enjoy the success of your business alongside you.
Loans, Subsidies, & Incentives
Finally, as you explore financial options available to you for securing capital, don’t forget about the more traditional sources of funding for your business.
Although the application process with these financing options will be more elaborate (with a rigid selection process), going this route could help you get the funds you need if you know for a fact that you’re running a stable and profitable business.
Minimum Viable Product
Lastly, as you explore ways to expand your business with new capital, don’t forget that, in most cases, the best way to improve your cash flow is to start selling as soon as possible.
Whether you’re a young business waiting to launch or an established organization exploring growth opportunities, remember the concept of the minimum viable product.
As a new product with the least amount of features to attract customers, an MVP can allow you to start making money as soon as possible (or test whether your audience is ready to adopt a similar solution). Sure, your returns may not reach six-figure sums right away. But if your primary concern is financial stability, then this strategy is definitely worth considering (at least).
Final Word
Expanding a business is never easy. Nor is it affordable. However, if you’ve got big plans, you can rest assured that there are multiple support options you can rely on — as long as you know where to look.
Whether you choose to bootstrap your business, find an investor, or go through official channels to secure funding, however, remember this:
The best way to grow a business is to do so sustainably. So don’t become blinded by impressive growth statistics. Instead, try to focus on how to make your organization successful, profitable, and consistently growing. That way, you’ll secure the future of your venture and boost your chances of joining the ranks of the one-quarter of brands that make it to 15 years
Hi I’m Sarah Kaminski, a freelance writer and social media marketer. I work with a number of small businesses to build their brands through more engaging marketing and content.
I am delighted to share my thoughts here on CaribDirect and hope they resonate with you. Please let me know what you think of my posts and provide suggestions on topics you would like me to cover.
Twitter – @SarahKaminski10
