As a small business owner, the question at the top of everyone’s mind in any market and particularly today’s is how do I fund the growth of my business? A growing business can be like a fine Italian sports car, it looks great and drives well, but if there isn’t any gas in the car it isn’t going very far.
1. Debt. Using Debt to fund your growth is as much of an opportunity to build capital in today’s market as you have of discovering a sunken pirate ship in your neighbor’s swimming pool. Unfortunately, all of the “leg work” done by our freindly politicians to increase lending to small businesses hasn’t exactly panned out yet. It still is pretty tight at the bank. Expect to be required to have at least 30% in collateral on the loan and over a 700 credit score. SBA loans have a little more opportunity, but they cap the limits of the loan amounts.
2. Private Investors. Targeting private investors in today’s market has taken on new light with the difficulty in the credit markets. It still isn’t easy, a good investment package should have a clear, concise and targeted business plan that identifies experience, growth potential, investment, return on investment and timeline for that return. Don’t get fancy, don’t fudge and be straight forward. If you aren’t making a profit in your business now and you haven’t hit homeruns in the past it will be a long road, but always worth a shot.
3. Venture Capital. Looking for Venture Capital funding to grow your business has lost a lot of it’s luster over the past three years. Possibly because the faucet has turned off for new deals, but also maybe because businesses started realizing that the terms to VC deals are about as friendly as a badger with hemroids. You need to have a pretty tight concept with a good track record to attract VC funding in most cases, and typically these deals are not going to benefit you even if they do work.
4. Franchising or Licensing your Business. Franchising is still a viable expansion tool depending on the business concept and model in today’s market. How does this relate to funding? Franchisees invest in a business model through the structure of a franchise relationship. The upfront franchise fee and royalty payment back to the franchisor (you), substitute as the investment in your business. That coupled with new locations of your operations, bigger brand, marketing capability and other attributes of a growing franchise system equals higher sales and opportunities for strategic partnerships.
For information on franchising your business or franchise development work, contact
Franchise Marketing Systems –