Without sufficient growth capital, cash flow is interrupted, and small businesses face possible stagnation and decline. Although owners may be reluctant to borrow funds or share equity, these steps are sometimes necessary to help companies continue to flourish. Here are some means of securing growth capital to help your small business not only remain afloat, but also thrive.
Invest in Your Own Company
Sometimes you have to believe in your vision enough to put your personal assets on the line to achieve the continued prosperity of your fledgling small business. Your willingness to convert your own funds into growth capital highlights the confidence you have in your company and encourages outside investors to add their capital as well.
Find Angel Investors
Angel investors are individuals or groups who seek companies in which to invest growth capital that meet their personal idiosyncratic criteria. Although they may want to offer advice or even sit on the company board, they can often put you in touch with suppliers and customers that stimulate company growth.
Approach Venture Capital Firms
Venture capital firms often have large amounts of growth capital to invest in your company for their clients. In return, they desire equity in your business and possibly a place on your board. One of the main advantages of this arrangement is that the granting of equity precludes costly loan payments. However, by sharing equity you also reduce your own amount of company ownership.
Borrow From Banks
When you borrow the growth capital you need from banks, you retain full ownership in the company and decision-making ability on how to use the funds. On the down side, substantial ongoing loan payments can negatively impact business cash flow, and you are liable for the loan even when the company is struggling.
For more advice on securing growth capital for small businesses, get in touch with IRC Commercial Lending.