The Implications of Growth Capital for Your Business
If your business is doing well, then you’re likely thinking about growth. In the competitive business world, it can feel like growth is synonymous with success, but that can also add a lot of pressure. Those types of goals often call for more hires, larger product orders and even extensions or bigger locations. All of that costs money, but what do you do if your company is growing at a steady rate, and you still don’t have the capital you need? You probably need growth capital, and here are some ways to get it.
When an owner is passionate and confident in their business venture, they are usually excited to invest in their own company. In some cases, they have no other choice. If your business is doing well and needs an infusion of cash for growth purposes, you may feel more secure in contributing your own money than you were when the company was in its infancy. Even if you still have to seek financing elsewhere, the fact that you believe strongly enough in the business to contribute your personal assets makes a big statement to banks and other potential lenders.
Many business owners want to avoid loans, and for good reason. Debt can take over monthly budgets and become increasingly difficult to pay off. While a large loan can go far as growth capital, the payments can turn into a problem if your timeline is delayed for any reason. Some companies need to cease operations while they move or renovations are completed. If your income doesn’t increase as expected after you invest the capital, the loan may become a bigger source of stress than it’s worth.
If you’re willing to give up some ownership of your company in exchange for an investment, venture capital firms can benefit you in more ways than one. Not only do you get the invested capital, but you often also get the experience and guidance of the investors. You may even have one of them on your board. Their investment is a vote of confidence, and you can use their knowledge to grow even more in the future. Angel investors work in much the same way as venture capital investors, but they may be more likely to invest based on their individual passions and assessments of the company.
Business growth can be vital to the future health of your company, but you shouldn’t have to stress about finding the right type of growth capital. With some research, you should be able to find the capital that best fits your company’s growth goals.