The feeling of accomplishment that one gets from the success of their own business is typically followed by the realization that success may necessitate pursuing larger goals and focusing on growth. This realization should lead to the formation of strategy with regards to acquiring the capital necessary to actualize those plans.
Entrepreneur.com contributor George Deeb stated that creating growth hinges on investing in your business, but that the resultant expenses of those investments can complicate your bottom line.
Some small-business owners who are faced with these complications end up feeling reluctant to incur any further business debt. This is particularly evident in family-run businesses, according to Deeb, where personal and business expenses are more closely associated with one another and, sometimes, intermingled.
If this is the case with your business, a small-business loan may be the best solution. The funds will be set aside specifically for the business, preventing you from being tempted to skimp on the necessary expenses required to grow and simultaneously allowing your family budget to stay separate.
Business owners who are reluctant to take out a new business loan may try to cut their operating costs to come up with the funds themselves. Making the cuts necessary to finance significant growth is a time-consuming task, and if you are the founder of your company, your time is an incredibly valuable resource that would be better spent focused on other areas of need. When budget-cutting doesnï¿½t result in enough savings, another common trend is for business owners to decide to cut back on the goals they have for growth.
But according to Deeb, long-term goals should remain intact irrespective of debt. Debt, she noted, is not necessarily a negative thing for a growing business, particularly if your plan for growth provides realistic avenues through which you can recover that debt.
Fortunately, your financial institution isnï¿½t likely to approve your loan if you are unlikely to pay it back. Furthermore, a small-business loan allows you to retain your current level of ownership in your business, which is a valuable thing for owners with long-term plans.
Before talking to your financial institution about bankrolling your growth, you need to flesh out your strategy. According to the U.S. Small Business Administration (SBA), expansion is typically the first approach to growth.
Acquiring another company is a comparably popular strategy, and it allows you to avoid the time-consuming process of setting up in a new location by relying instead on existing employees and infrastructure. You can also maintain a pre-existing customer base instead of having to market your business in the new area from scratch, which better assures success right out of the gate.
If expanding into a new physical location or gaining a new location by purchasing another company isnï¿½t preferable, there are a variety of other options. The SBA suggests, among other ideas, franchising as a means to create growth without the stress of self-starting a new location.
For more growth strategies and information about projecting your growth costs, visit https://sba.gov/managing-business/growing-your-business, and make sure to take advantage of the experts at your local financial institution, who are well-versed in the growth strategies that are tried and true in your community.