5 Tips for Finding Capital to Expand Your Small Business

When a small business needs to make a move, capital is often required. The problem is finding sufficient capital to make this jump, which is where these five tips come in. The following will help you find what you need to expand your business.

1. Owner Investment Option

Sometimes, business owners have a hard time admitting it's time to invest profits back into the business. Lack of investment leads to a stagnant business. If you can invest some of your own money, then do so. Investing some of your money also shows potential investors that they can trust your vision. Plus, investing on your own accord gives you more freedom.

2. Seeking Specialized Investors

If you look for regular investors, you will be competing against a lot of other investment opportunities. This reduces the chances that you'll be chosen. You want to improve your chances, which is why you need to look for specialized investment firms. Firms like the Chernin Group (TCG) focus on a narrow band of investment opportunities. Finding a firm to match your industry helps secure a higher chance of getting the capital your business needs. Some focus on clean energy, and others focus on culturally relevant businesses. It's wise to find out what works for your type of business and use that to your advantage.

3. Giving Up Ownership Stake

Business owners have a hard time letting go sometimes and allowing others to become part owners of their business. It doesn't feel good to give up some control, but avoiding these investors could stifle growth. If you're willing to accept the terms of venture capital investors, then growth is possible. These types of investment groups or firms only invest in businesses they believe have a chance of succeeding. On top of that, these investors are interested in the direction of your business. They will offer ideas, business direction, and much more. Sometimes, these firms will send a representative to your board meetings to express the desires of the investors.

4. Borrowing the Capital

You want to find investors who believe in your business and vision, but that doesn't always happen. At this point, borrowing is the next option you have. This usually means going to the bank. Ideally, you're able to go to a community bank rather than a larger bank, which is generally not as helpful as community banks. A business loan doesn't come with some of the issues associated with investors, like giving up some of your ownership. While this could be an excellent thing for you, especially if you can pay it back on time, it could also be a burden. If it takes your business a little longer to start making a profit, then paying back this loan will become a lot harder to do. If you decide to go this route, make sure you map out your repayment plan to avoid running into any unwelcome financial issues.

5. Alternative Lenders

If you exhaust all of these options and simply don't know where to go, you might feel hopeless. Even when things seem hopeless, you always have a solution. It may be possible that someone in your inner circle wouldn't mind investing a bit for something in return. If you get enough people to invest, then each person won't have to invest too much, and you still get the cash you need. If this is not a good route for you, then you can always try crowdfunding. Many growing businesses have found enough capital to expand using an online crowdfunding campaign. Keep in mind that some of the most successful crowdfunding stories have been from companies that knew how to pitch the value of their business.

Finding enough capital to expand isn't going to be easy, but that's part of the fun of being a business owner. Hopefully, you find the capital you need using some of these tips here, but you can also talk to a small business advisor if you need more advice.