One sign of a healthy business is that it has growth potential. Businesses that are growing are also, typically, regarded as showing very positive “life signs”.
However, businesses can struggle to start growing or to sustain it once underway if they are starved of business expansion finance.
Here at ACF Direct, we’re expert in identifying solutions for business finance, including that associated with business expansion.
Self-funding business growth
Of course, if your business is exceptionally profitable and “cash-rich” then you may be able to fund its further expansion from your own finances.
That’s very much an ideal position and one that many businesses would like to achieve.
Yet even if you have cash reserves, it might not necessarily always be in your company’s best financial interests to invest them exclusively in funding your own growth. This is a subject that would typically be discussed with your accountant but there may be circumstances where you would wish to keep some of that cash in the bank.
Examples might include having reserves to deal with a crisis or making an emergency acquisition etc.
Non-cash funding of business growth
You may have other sources at your disposal for raising capital to fund expansion. They might include:
- issuing shares (or more shares) in your business in order to attract investors;
- asset refinance. This essentially means leveraging any equity you have in existing assets (typically property but also potentially things such as plant, land and so on) to raise money. That typically entails borrowing money against any equity you hold in the asset;
- attracting entrepreneurial investment. This might involve seeking people who will inject a substantial sum into your business in return for a guaranteed share of the business and its profits;
- state business expansion loans. There are possibilities, in very specific circumstances, where there may be certain state assistance available for things such as a business expansion, relocation and so on;
- private business expansion loans. As the name suggests, these usually entail borrowing from a lender in return for a standard loan repayment system over time.
There is no one-size-fits-all solution to finding business finance for expansion purposes.
With all of the above options, there may be advantages as well as some issues to consider.
- issuing shares offers the advantage of potentially raising significant capital but also brings with it the risk of your shares not being taken up enthusiastically by the market and potentially a dilution of ownership in terms of existing premium shareholders;
- asset refinance may typically be cost-effective but in some situations, your asset may be at risk if you do not keep up repayments on the sums borrowed against it;
- attracting entrepreneurial investment may yield a fast injection of substantial sums but it might also typically require the signing away of a degree of control over the business in terms of how it is run and its strategies;
- state business loans may be relatively simple to operate but the application and approval criteria can be complicated and they might typically not be as readily available in today’s economic climate as they once were;
- private business expansion loans have many advantages but your application will need to meet certain business credibility criteria and it might be advisable to have specialist assistance in terms of identifying a selection of the more potentially suitable solutions.
If your business is not to potentially be put at risk by its failure to expand due to a lack of business finance, it might be important to take expert advice on the subject now. At ACF Direct, we can help you expand your business with our finance options. Please contact us today to see how we can help.