2016-07-07 00:00:00 Money & Finance English https://d3hrajprm8dqcv.cloudfront.net/wp-content/uploads/2017/05/08194822/Article-11-513087839.jpg Financial Considerations to Keep in Mind When Growing a Small Business

Financial Considerations to Keep in Mind When Growing a Small Business

2 min read

Things are going well with your small business, and you are ready to expand. But there are a number of things to consider before you even begin to move your company forward. Starting up your own business can be one of life’s most rewarding, albeit challenging endeavors. The feeling of satisfaction when your business begins to establish itself is undoubtedly worth the hard work. For many entrepreneurs, business expansion is the point where different challenges begin to present themselves. How does a small business owner move the company forward? It could introduce a new product line or expand a current one. It could hire more people and move into a bigger office space, or perhaps upgrade its equipment. However you choose to grow your business, it is likely that funding will be needed. So how do you go about financing that growth? How to get funding There are numerous ways a business can get the finances it needs to expand. Depending on the maturity and success of your small business, it may be possible to get a venture capital (VC) firm to invest. While this allows the organization to benefit from the VC team’s wealth of experience, it can be difficult for founders to cede control of their business to these investors. Self-funding is also an option. Of course, while that means you retain full control of the business, it can pose a huge financial risk to you should something go wrong. A bank loan is another possibility for financing expansion. But that brings with it its own set of risks, without the benefit of experienced investors coming on board. You’ll also have to consider what types of collateral your business can afford to put up to secure the loan. Explore other means of financing Depending on the nature of your business, it may be worth looking at crowdfunding investment. If you have a product people can get excited about, then there’s a good chance they’ll invest in it. Crowdfunding in India has yet to reach the heights of Europe or the US, but it is a growing option for businesses. If your small business sees itself as a startup, you may want to consider accelerators or incubators to help with expansion. While there are similarities between the two, there are several important differences as well, so it’s important to understand what these are in order to target the option that best suits your business. Besides financial investment, accelerators and incubators provide mentorship, networking opportunities and even a physical space in which your business can grow. They are great for preparing small businesses for growth and future investment. Be certain about expansion Taking on increased funding to expand your small business is a double-edged sword. The rewards can be great, but this investment can also come with a loss of control, and may even backfire if a company expands too quickly or before it is ready. If you are certain that increased financial investment is the best way forward for your business, you’ll have to work out the type of investment that best suits your business needs. Start by deciding how much you are prepared to risk and how much control you are willing to give up, as that will help determine the method of funding that is right for your business.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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