Types of Financing for Business Growth
When looking to grow your business by finding a good financing solution, there are several different options for you to choose from, based on how much funding you need, how long you need to borrow it, and how much control you want to maintain over your company in the meantime. Here are a few different possibilities you have to consider in financing for business growth.
Firstly, you could decide to go with an angel investor. You may know a wealthy entrepreneur that could choose to be your angel investor, or you may have to go through an association to find your ‘angel.’ Either way, they would decide that your business is worth investing in, and they give you the money needed in exchange for a share in your company. On the positive side, you get a good deal of funding to do what you need to. On the downside, you are giving away a good percent of your earnings to the angel investor.
Another popular option to consider for business growth is opening an Employee Stock Ownership Plan (ESOP). These plans are for privately owned companies and allow their employees to own parts of the company with them. Employees are distributed shares of the company as a benefit, creating a market in which expansion funds can be formed.
You may also decide to include the public in your financing by selling stock of your company to the public via Direct Public Offerings (DPO), which is great for small businesses looking to get into the public capital marketing scene. Or, if you have a steady track record, growing sales, and operate in a recently popularized market, you could decide to accept Initial Public Offerings (which is great for marketing but expensive to start.)
As an entrepreneur, you may also like to consider Venture Capital as a financing option for business growth. The downside to venture capital is that you lose a lot of control over your company, but the gains may make it well worth your while in the end. You see, by obtaining venture capital, your company automatically is understood to have a great deal of potential for rapid growth. Venture capitalists loan to young companies only and the companies they choose to lend to typically have a great success rate, making this option very attractive for many because of the attention and large amount of funding they receive. With the variety of options available in growing your business these days, you can set yourself up for success by selecting the right financing option for you.