Running and expanding a business isn’t for the faint of heart. Many who take this direction fail during the first few months or years of operation. There are several reasons small companies don’t grow or expand, one of the common reasons being financial hurdles. Without enough capital, your company won’t be able to fund any expansion opportunities.
If your business doesn’t have enough retained earnings for expansion purposes, there are other ways of raising additional cash. They include the following:
1. Consider Online Lending Services
One of the quickest ways to raise funds for your business expansion is to borrow money from online lending platforms. The best thing about online lending is that the process can be quick since most companies will likely process your application within 24 hours. Besides, it eliminates the need for a lot of paperwork because the entire process is carried out online. With this, you can save time and other hassles associated with traveling.
However, you should be careful when turning to online lending services to secure funds for your business. Some providers claiming to be the best in the sector aren’t genuine and just want to steal data from people. To avoid these kinds of providers, ensure you choose the right loan app or provider. You can achieve that by reading other clients’ reviews or asking for recommendations from other small business owners.
Apart from online lending, you can secure loans from banks, microfinance, and other traditional financial institutions. Most of these companies have operated for years, so you can trust them. However, you should be ready to remain in long queues and do a lot of documentation. But still, it can be a great way to find extra funds to expand your operations.
2. Seek Finacial Aid From Friends And Family Members
You can also turn to your friends and relatives to secure funding for your business expansion. This is one of the cost-effective methods for raising money for your business. People who trust you will likely offer you the loan at very low interest, with others asking for nothing.
Besides, seeking financial assistance from friends and family members enables you to negotiate for better repayment schedules. Unlike financial institutions that require you to commence repaying your loans immediately, friends and family members can wait until your business gains momentum. This ensures your company can level up quickly.
3. Dispose Of Some Assets For Cash
Another practical approach to securing funds for your business expansion is to sell some of your assets. If you have some equipment or assets that you no longer use in your business, you can sell them and raise some money. This can be motor vehicles, generators, fridges, computers, etc.
4. Find Angel Investors
Today, several wealthy people are willing to financially support the growth and expansion of small businesses. Those people are known as angel investors. You can partner with a few to take your business a notch high.
Angel investors work like financial lending institutions. However, they charge very low-interest rates on their money compared to finance lending institutions. Besides, they won’t require you to refund the money if your company fails. Therefore, raising capital from angel investors can be a good way to minimize your risks. But before they agree to offer their support, your business must show high growth potential.
5. Partnering With Venture Capitalists
If you aren’t bothered about retaining the entire ownership of your business, you can consider partnering with venture capitalists to fund your expansion mission. These investors are ready to give you the money you need for your business in exchange for equity. In other words, they won’t ask for the money they give you back. But you must be ready to forgo some ownership of your firm.
6. Consider Crowdfunding
Crowdfunding is a type of peer-to-peer online fundraising. It’s a scenario where you request a crowd of people to donate money for your business. In return, such people may expect some rewards from you. Ensure you work with the right audience.
You need to know that the various crowdfunding platforms have different terms and conditions. Therefore, ensure you research well to identify the best site for your business. Remember that you won’t get all the money you raise through crowdfunding. A small portion will go to the crowdfunding service provider as a fee.
Takeaway
You might want to expand your business to overcome the market competition. But you won’t achieve that if you don’t have adequate retained earnings. Fortunately, you can consider several other options to raise funds for your business expansion purposes. They include applying for loans, seeking financial aid from relatives and friends, crowdfunding, and more. Ensure you find the best method for raising funds for your company.
