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This post was first published on September 22, 2017, and has been updated with more information about using financing to grow your business.
When you start a small business from nothing, you can’t expect it to develop into the company of your dreams right away. To effectively grow your small business, you need to hit various milestones along the way. Reaching these milestones will help you expand, but it won’t be cheap—small business financing can play a pivotal role in driving growth.
Here’s what you need to know about utilizing financing as a small business growth tool to reach the next level and boost revenue.
Minor steps can only take your small business so far when it comes to growth—eventually, the next milestone will require funding.
The only ways that you can finance growth in your business are reinvesting profits, raising equity, and leveraging small business financing.
Reinvesting your profits may seem like the cheapest option, but it’s not always the most practical.
In the very early stages, you may find yourself keeping more money in your business than you’d like. This isn’t uncommon—many small business owners opt not to take a salary, putting their revenue toward employees wages or operating costs instead. As your business continues growing, you can start to pay yourself—but it will be difficult if you’re determined to grow through reinvesting profits alone.
If you choose to grow your business with only cash on hand, it can take forever to achieve your goals.
Raising equity gives you the resources to achieve your goals at a much faster rate, but with a different caveat. When you sell equity, you lose full ownership, profits, and depending on the stake you sell, control. To reap the full benefits of small business growth, you need financing.
Regardless of your business’s industry or age, small business financing can help you reach the next level. Personal loans and credit cards generally don’t provide enough cash on hand. Online lenders offer a variety of funding options, including:
These are some of the most popular ways that your small business can utilize financing as a tool for growth.
Eventually, your business will reach a point where the next natural step is expansion. Depending on your business and industry, that could mean:
Whichever way you go, it won’t be cheap, and working capital may not cover all the costs for the long term.
Using financing to grow your small business gives you the cash you need to lay out. While the expenses can be steep, especially in the beginning, the potential ROI could be substantial.
If you have an opportunity to double or triple your total revenue, then using financing to get there is a no-brainer.
No matter how robust your business growth strategy is, you’ll always need more customers. Customer referrals can help you out when you get started, but marketing allows you to bring on the customers you need to reach that next milestone.
42% of small businesses fail due to a lack of market demand, so proactively building out a marketing strategy helps you keep cash flow smooth.
While you can get started marketing your business on a low budget, you’ll eventually have to scale. Hiring a marketing strategist, team or agency costs money. To see the results you’re looking for, you’ll need cash to hire employees, and cover other expenses, like:
Utilizing small business financing to cover various (but important) marketing costs can help your business grow.
No matter how thoroughly you plan, there’s always a chance for sudden expenses. Instead of hitting a roadblock and stopping dead in your tracks, financing gives your small business growth strategy flexibility.
With extra cash on hand, you can cover sudden expenses, instead of reconsidering or abandoning your strategy.
If your small business experiences a rush during one period of the year, and a slowdown during another, then you’re not alone. But, you also don’t have to simply accept this as a reality. Small business financing can aid your growth by allowing you to keep the momentum going during off-periods, while fully capitalizing on opportunities.
As cash flow decreases during a seasonal slump, you can use extra cash to continue improving your business. When business is about to pick up, financing can help you put the right gears in place to stock up on inventory, hire more employees, and more.
Footing the bill for new equipment isn’t always possible when you’re covering other expenses in your small business, and renting it just doesn’t make financial sense. Using financing to buy new equipment—which you’ll then own forever—helps you get a competitive edge.
Outdated equipment can slow your business down, or limit the quality of the products/services you provide. Buying new equipment streamlines things, and may help your business reach the next level.
In other cases, new equipment can also help your small business pivot into a related industry and provide customers with additional value.
Rather than purchasing equipment outright or renting, equipment financing helps you achieve your small business growth goals with a more manageable payment structure. You can qualify for many equipment financing programs within hours, and also take advantage of helpful tax incentives.
Whether you’re approaching a busy season or simply want to scale, buying in bulk allows you to purchase more inventory at a cheaper rate. Financing can give you the extra cash you need to buy more inventory and ultimately, yield a higher profit.
Without enough inventory on hand, your small business could be missing opportunities to maximize profits.
Buying in bulk helps your business in other ways, too. Beyond tapping into discounts, you may also have more time to pay, expedited shipping, enjoy priority access to limited items, and other value adds.
Even the best business growth strategies can fall flat without the team you need to execute them. Hiring employees to take your business to the next level can, however, become expensive.
The hiring process alone can be expensive, between the time you spend finding, vetting and interviewing candidates. Beyond that, you’ll have to foot the bill for a salary, insurance, equipment and more.
Employers are always vying for top candidates, so if you don’t want to lose employees to competitors, then it may also make sense to invest in a good culture that encourages employees to stay. From team outings, to catered lunches, to professional development opportunities, fighting to keep employees on board can help your bottom line.
Having extra cash on hand gives you the wiggle room you need when it comes to hiring employees, and paying for other expenses.
It’s easy to get caught up in the day-to-day of your business, but important to remember that real growth takes resources.
At National, you can qualify for the best interest rates, terms and funding amounts on financing for small business growth through our 75+ lender marketplace. Because we have programs for business owners with good credit and challenged credit, you can always find the best options.
When you apply, you’ll be connected with a Business Financing Advisor who understands your business and is eager to learn more about your needs. After completing a 60-second application, you’ll have the opportunity to complete the process by submitting bank information through our bank-grade portal. You can receive financing in just a few hours!
Get started taking your business to the next level by applying now!
National Business Capital is the #1 FinTech marketplace offering small business loans and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.
Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.
We strengthen local communities one small business loan at a time. For every deal we fund, we donate 10 meals to Feeding America!
Joseph Camberato, CEO of National Business Capital, developed a passion for business at a young age. Joe started his company in 2007 in his spare bedroom and has grown to secure over $1 Billion dollars in financing for small business owners nationwide. National’s team has an amazing culture and has been name the #1 Top Workplace on Long Island 3 years in a row and counting. Joe is a trusted financial expert who’s published more than 2,000 articles in the last 3 years. His articles have generated over 5 million page views and has been featured on blogs such as Google News, Yahoo, CNBC, Forbes Magazine, etc. His passion has also inspired him to build the "GrowByJoe” YouTube channel where he shares his insights into small business trends and tips for growth. Joe also holds a seat on Forbes Finance Council and is an active member of the Young Presidents' Organization (YPO), a global leadership community.