To prevent stagnation and possible failure, small business owners need to find a source of funding to boost the growth of their companies. Additional capital provides the impetus and momentum to power a business to greater success. Here are some of the best sources of growth capital for your business.
Take Out a Loan
Getting a loan from a credit union or bank is one of the most obvious ways to obtain needed growth capital. You can usually spend the money on whatever needs you have, and you retain full equity in your business. However, if your company takes time to achieve profitability, the loan payments can become onerous. Even if your business struggles, you have to pay the bank back.
Invest Personal Savings
Lenders often require entrepreneurs to come up with a portion of the growth capital they need out of their own pockets. When business owners invest their personal funds in their companies, it sends a signal to potential outside investors that the owners are confident and committed to what they have created.
Approach Venture Capitalists
Venture capital firms typically have large amounts of funding available to invest in new businesses. The main advantage of this method of financing is that you do not have to make regular loan payments. However, venture capitalists require equity in exchange for the growth capital they offer. They will want to have a hand in decisions regarding the company’s direction, and may even want to place someone on the company’s board.
Find an Angel Investor
Angel investors are similar to venture capitalists. They are often looking for specific types of investments, and if they are interested in your business, they may want to provide you with advice or sit on your board. Angel investors may be connected to networks of suppliers and clients that can aid your company’s growth.
For more advice on acquiring growth capital for your business, get in touch with Private Client Capital Partners.