Getting ample funding is one of the biggest obstacles to establishing a business. This is because you need to spend money to raise your business from the ground up before earning money from your products or services.
But now that your business is on a steady track towards the right direction, the next step would be to expand your capacities. If you’re selling products, you should now focus on increasing your inventory with new offers or reaching a wider audience by adding more products.
If you’re offering a service, on the other hand, then you should be scaling your business to cater to more potential clients. This can include increasing your resources, manpower, and platform so that you can handle the additional workload and cope with the growing demand.
However, before you can expand exponentially, you will need to be able to finance the expenditure. You can always get the funding from your profits, but that can be inefficient if you’re taking the budget out of your daily operational costs. Don’t worry because here are your other options to get funding:
Apply for a Loan
One of the best and easiest ways to fund your financial endeavors is by taking out a loan. You can apply for a personal loan which you can immediately get once your application has been approved. This is also be called a signature loan because all the lender needs is for you to sign your name on the agreement.
It can be repaid within two years of your contract, which will be enough time for you to gain profits from your expansion. Applying for a personal loan is also a great way to get funding if you don’t have the most pristine credit record, especially when compared to a traditional bank loan.
Another option that you have is to get a microloan, which is targeted towards small business owners. If you only need $500 to $35,000 to expand your business, then a microloan will be perfect for the task. Microlenders require fewer documentation papers and won’t ask for collateral when applying to get this kind of loan.
Start Fundraising
Not everyone wants to go through the winding process of applying for loans. If you prefer a more direct approach, you can begin a fundraising initiative instead of taking the traditional method involving loans. For instance, you can seek financial assistance from your friends and family.
Of course, you will need to show them evidence-based data and financial projections regarding your business so that they will be assured that their money is going somewhere useful. This is easier now that you have a few months or years under your belt, which means you have plenty of data to back your credibility up.
Another method that you can use to raise funds is by going on crowdfunding platforms. This is great if you prefer anonymous help over those with whom you have personal relations. Crowdfunding platforms are public websites that allow individuals to pledge certain amounts of money to support promising ideas, such as your business’s growth.
Use Your 401(k)
All those years of hard work inside the corporate world can be useful to your business because you have the option to repurpose your 401(k). Based on the tax code provisions, you can use your retirement fund to finance your business provided that you follow the regulations to the dot.
Of course, using your 401(k) to fund your expansion comes with risks because you’re going to lose both the business and your retirement assets in the event of failure. But if you trust that your business will take off because of your hard work and determination, then those risks shouldn’t stop you.
You might need an expert to help you navigate the complex system of borrowing from your 401(k). Should you choose this option to fund your business expansion, having a professional who can guide you through the process is a must to avoid any disasters from happening.
Get Venture Capital
If you believe that your company is worth investing in, you can search for potential investors to reach greater heights through venture capital investments. Venture capital usually comes with an agreement for company shares and an active role in running the business.
This means that you must give up a portion of control with regard to deciding what’s best for business and sharing that responsibility with your investors. The investors you will be working with are in this with you for the long haul because they want to see their capital turning into equity instead of debt.
Unlike the other financing options mentioned above, getting funding from venture capitalists is different because your partnership will go beyond the monetary transactions. These investors will be with you from your expansion until well into the future unless they decide to pull out their investment due to various reasons.
Growth is never a bad thing, especially not when it comes to business. You can’t let the fear of failure or stagnation keep you from reaching your business’ full potential. So face the risks with your head held high because no one ever becomes successful by staying in their comfort zones.