When your business is ready to expand into new locations, sectors, or anything else, the biggest hurdle in the way is usually finances. Hoping that profits alone could help is a dilemma actually. Small to medium sized businesses rarely earn profits big enough to solely finance and expansion. But expanding is necessary to earn huge profits that investors expect. See the predicament.
No businesses, even the major corporations, find is easy to finance expanding business operations. But it must be done to dominate your niche. Amazon is a prime example of this phenomenon. It’s one of the biggest online retailers in the world; the brand that upended retail. And yet, Amazon has yet to turn a profit. The company instead raises funds to reinvest in everything from cloud-based services to Whole Foods. The result is a giant corporation that no one can ignore.
Now your small business might not become as big as Amazon, but that’s no reason not to be ambitious about expansions. Here are several options that might help you finance the project as you like:
Borrow Business Specific Loans
Borrowing is obviously the first, and usually the only, option for most small business owners. There are several ways to borrow money, and doing it right is important for avoiding crushing debt later.
You can seek personal loans or borrow against an asset you own. But you can avoid the risk of losing your assets by seeking out highly business specific private loans. For example, say you want to expand into freight transportation. You can seek out truck loans provided by reputable lenders in your area. Your loan would be then tied to the business, and not a personal asset that you could lose.
Seek Government Business Assistance
This is not a readily available option. But many countries have loan schemes to support small to medium sized business owners. These may not be widely available, but you can still try to research such financing options you might qualify for.
You can increase your chances of getting approved for a government financial assistance by paying down any personal debts you might own. Debts like mortgages are fine as long as its without delinquency. But if you have other non-secured debts, try to pay these down as soon as possible. You can consider an option like debt consolidation to help you pay off loans quicker.
Small businesses rarely find angel investors, like they show in Silicon Valley movies. Angel investors are typically not interested in businesses not in the innovation sector. So when this option is not viable, you can instead try crowdfunding online.
It may not be easy, but it has worked for many enterprising entrepreneurs. As long as you have a good business idea that you can pitch to an online audience, crowdfunding should work.
Don’t hesitate to exhaust the above options before you give up on your dream of expanding the business. The above options are better for your financial security than doing something like taking out a second mortgage. Businesses are notoriously prone to volatile market risks. So don’t risk losing your family home. Use one of the above suggestions instead to raise funds to improve your small business venture.