The only option for a business to grow is for an expansion to take place. Once a business has reached a particular stage, the only way to increase revenue and profit is to expand. This expansion financing is typically different from the startup capital that was acquired when you first began your business.
To be able to fund your expansion, you first need an increase in assets. There are several ways you can do this. You can look to outside sources for additional financial support or you can increase your income with trading platforms such as Banc de Binary. Here are some of the options afforded to you for expansion financing:
Internally Generated Funds
This is a maneuver that is adopted to fund the growth of the company with the revenue and the profits that you have made thus far. Instead of placing the profits in an account to generate interest, you put the money back into your company. This will help to fund the growth that needs to take place. This remains one of the beneficial methods to fund the company without external assistance. A point to remember is to limit the amount of funds that you place back into the company. Only a certain portion of the profits should be used to finance the expansion, not all of it.
Self-Financing
This is when you use your personal finances or assets as collateral instead of your business. You use the commodities and assets that you have as an individual to either open up a line of credit or get a loan. You can use credit cards or even your personal property such as your home. This particular method should be used if the amount that you need is relatively small. This will allow you to get the funds that you need without too much of hassle. For ventures that are larger in nature, this is not the most ideal option. This is because you can lose your home or severely damage your credit score with risky projects.
SBA Loans
These loans are typically tailored to small businesses who need less capital than other, larger corporations. These are generally advantageous to small businesses as the collateral that is required is minimal as opposed to other financial institutions such as banks. These loans are also created so that there are no balloon payments involved. There is a little bit more difficulty with obtaining these loans as they are typically approved by the government. There is also a great deal of documentation involved.
Prior to looking for options to finance your expansion, first consider the various aspects of the expansion. You can then determine the amount of capital that you will require for the venture. This will help you to choose a financial plan that is best suited to your growth strategy. It is important to be realistic about your expectations as well as your ability to pay back any loans you may obtain. This will result in less risk being incurred both by you as well as your business.