Finding the right finance options for your growing business can be a stressful scenario, but this article will give you a good insight into where to start.
Featuring 7 Types of Finance you might consider for your business evolution, we outline which types of finance suits whom and the considerations you could make before deciding on the right one for you.
Because (sadly) money trees aren’t actually a thing, your decision to expand your business will usually require some form of finance.
There are several ways you can go about raising the funds you need to make your business expansion dreams a reality, and this article covers off on 7 types of finance you should consider if scaling up your enterprise is on the cards.
The first initial start-up capital for Amazon.com came primarily from my parents, and they invested a large fraction of their life savings in what became Amazon.com. And you know, that was a very bold and trusting thing for them to do because they didn’t know. My dad’s first question was, “What’s the Internet?” Okay. So, he wasn’t making a bet on this company or this concept. He was making a bet on his son, as was my mother. So, I told them that I thought there was a 70 percent chance that they would lose their whole investment, which was a few hundred thousand dollars, and they did it anyway.
While funding a business expansion or even start up via “love money” is a real option like in the case of Jeff Bezos, it is also one fraught with peril. For many, the old adage of “don’t mix business with pleasure” could apply here and oftentimes it is better to leave your relationships and friendships outside the sphere of your working life to protect the relationship and not muddy the waters with loans or expectations.
Finding the right form of business funding for you will be a personal solution, balanced on a number of variables unique to your business and you.
There are no ‘one-sized fits all’ approach and it pays to do your research thoroughly before deciding on the type of funding that fits.
If you find this world a little overwhelming and do not know where to start, reach out to us for a chat, we’re always happy to explain these options to you further or steer you in the right direction.
*Ingredior is not a financial planner, broker or institution. Information provided in this article should not be considered legal advice, we recommend speaking with your lawyer (or seeking one out) and your accountant before making any decisions on your business and personal circumstances.
Thoughts:
- With so many options available to you, finding money to expand is certainly achievable, it is deciding which option is best for you and your business’s future that is the important factor.
- Having your business strategy to hand can assist in making expansion funding choices, who you want involved in your business short, mid and long term according to your business strategy will determine the type of funding you might seek out.
- Finding and securing funding your business can take time, you will need between 6-12months planning and lead time for some of these options. Consider time in your decision making as it might be something you are not in surplus of.
Test this theory:
- As a quick activity to get things started, create an excel document to map these options as best you can;
- You would consider each funding option (columns).
- You would also consider the positives and negatives of expansion funding, using the above points under funding option as a guide (rows).
- You would then go through and ‘tick’ or highlight which rows apply to each column based on your business and personal circumstances.
- This would help guide you on potentially the most appropriate type of expansion funding for your conditions.
