Many businesses reach a point of sustainability with regular income and want to take the next step for growth, but safely. Businesses in debt can often make bad choices because they don’t think they have any other options. At RBSS, our business consultants often get asked the question ‘how do I grow my business without debt?’ We help clients with this situation regularly enjoy creating strategies to help businesses thrive. Although debt can provide businesses with the capital they need to grow, it can sometimes be a risky option and it’s not for everyone. So how do you grow your business without incurring debt?
All business plans, when created with budgets and forecasts, should have at least thought about the idea of expansion. Ideally at the end of each business year there are profits that can be reinvested into the company or put aside for when the need arises. If you are not in that position, there has to be other options.
There are ways to make the most of what you have and grow your business without getting into debt. Let’s explore the options:
Grow with your business
As mentioned earlier, you can choose to grow with your business; where you invest your previous profits to grow your business. You grow as fast as your sales do. This might be a slow process though and you might hit a point where you need to expand to survive and don’t have the money. That leaves you with a difficult decision to make. Having a business mentor can help considerably to help develop your ideas.
Equity funding, or angel investors, means that you get investors for your company who provide you with a lump sum of money. However, this option means that you are giving someone else shares in your business and that you won’t have full control. This is not for everyone.
Factoring, also known as accounts receivable financing, is where a business sells its invoices, or receivables, to a third-party financial company known as a ‘factor.’ The factor then collects payment on those invoices from the business’s customers.
The main reason that companies choose to factor is that they want to receive cash quickly on their receivables, rather than waiting the 30 to 60 days it often takes a customer to pay. Factoring allows companies to quickly build up their cash flow. This is a great way to get money faster than you normally would have done, allowing you to keep the business moving.
Other options include government backed schemes. If you are eligible you might be able to get financial support from one of these schemes.
For a consultation with one of the business advisers at RBSS, to see how we can help you grow your business, call 0333 355 1696 or email firstname.lastname@example.org