When you first start a small business, all your concerns are about keeping your head above water. The day-to-day expenses and logistics of running a business are more than enough to keep you busy. But as your business finds success, sooner or later you come to the issue of expanding. Whether it’s opening a new location, building larger facilities, or just hiring more workers, with success comes growth, and expansion is often inevitable. There’s a lot more to expanding a business than simply making more of your product or selling more of your service. There’s additional infrastructure, the need for new or updated equipment, facilities to build or modify, and employees to hire and train, to name just a few.
Luckily, finding financing for business expansion is generally easier than securing financing for a brand new business, since by now, your business has a documented history of success. That’s something that you can take to potential lenders to secure funding at better rates. You will still have to do some research to find the right financing for your business and you will still need to convince lenders that your plan for the future is solid.
The first step for anyone looking to finance business growth should be to make sure that you have a clear and detailed business plan. Whoever your lender is, they’re going to want to see that you have a destination in mind and a roadmap for how to get there. They’ll want to see that you have a financial projections that include a plan to pay back the loan. They’ll also want to know that you’ve thought about the risks and possible pitfalls along the way, and that you’ve got plans in place to deal with them. Show them that you’ve taken into consideration all the various needs that your expanding business may have—from facilities to equipment to manpower.
The next step is to find the financing sources that are right for you. There are a lot of financing options available to small business owners, from “bootstrapping” (finding means for additional funding from within your company) to commercial loans, and from subsidies to investors or equity partners. Choosing the right financing sources will depend on the needs of your business, your objectives for the future, your financial picture, your risk tolerance, and the ownership structure of your business. Some of the most common forms of external financing are commercial or government loans (SBA), equity partners or angel investors (individuals with a high net worth who invest in entrepreneurs), and even loans from friends and family who believe in the future of your business.
Whatever form of funding your company secures for its expansion, one thing to keep in mind is that as your company expands, your entire infrastructure has to expand, too. That doesn’t just include locations and facilities; it also includes things like bookkeeping. Additional loans to finance growth means more complex accounts to keep track of, as well as loan repayment schedules, interest rates, and so on. Finding a partner like Virtual BeanCounters to help you make the most of your bookkeeping can save you time, money, and headaches, and free you up to focus your energy on the growth of your company.
Virtual BeanCounters serves business owners and entrepreneurs with remote web and cloud-based finance applications. Let our professional accountants run your daily, weekly, or monthly bookkeeping and accounting, so you can run your business. Contact us by phone at (913) 649-1040 or click here to visit our Contact page.