Get financing For companies it is always a complicated issue. Furthermore, this difficulty increases when its purpose is to promote its growth or corporate expansion.
Often, getting this financing for professionals it dilates or does not come to fruition. In these cases, it is necessary to consider other attractive possibilities that can benefit the company. Unique opportunities are wasted and the distress is maximum.
In this article, we provide you with information that may be useful about how to finance the company to grow and possible solutions to materialize it.
1. How to finance the expansion of a business: complexity and possibilities
Generally, financial institutions try to ensure the solvency of the recipient before granting any kind of financing. Therefore, when projects are proposed for get financing for companies and drive expansion or growth, they are quite prudent. This attitude complicates the agreement and may force you to reconsider how to finance the company to grow.
Some recommended alternatives
First of all, you must differentiate between these two types of business financing:
Dilutive. Obtaining the money involves the issuance of new shares or participations, so the owners lose part of them and, in this way, the shares in circulation increase. Among others, they include contributions from family and friends, incubators (programs or organizations that provide support to new companies and entrepreneurs), business angels (individual investors who provide financing and support to emerging companies or startups), the through crowdfunding (financing method in which a large number of people contribute small amounts of money to finance a project, initiative or company through online platforms), venture capital (investors who provide capital to emerging companies or startups in exchange for equity participation ) and the funds private equity (investment funds that invest in companies that are not listed on the stock market).
Non-dilutive. The company increases capital, but its main owners do not lose part of their shares. This option covers the public funding for professionals, bank contributions and some innovative alternative financing formulas. For example, him Factoring as a Financial Tool for Managing Seasonal Fluctuations in Trucking (assigning unpaid invoices to a financial institution to receive a cash advance) and soft loans for equipment (loans or financing with favorable conditions, such as low interest rates or flexible terms, specifically intended for the acquisition of equipment, purchase of machinery, etc.)
2. Why do you need to have a solid business plan to obtain this financing?
Having a worked, objective and rigorous business plan is essential to obtain financing for several reasons:
A well-prepared business plan is necessary so that financiers and investors can see that you really know your business and the market that surrounds it.
A well-structured business plan identifies and addresses present and potential risks, which increases the confidence of future investors and financial institutions.
A solid and clear business plan provides transparency and confidence to the business as it informs how resources and profits will be managed.
It doesn't matter if you are looking for traditional or alternative investors and lenders, no one will bet on you if you don't you demonstrate the reliability of your project. First of all, you must be aware that this is a professional, complete, rigorous and motivating document. It must be a qualified, exhaustive and precise analysis of the growth project
It is important to resort to the collaboration of qualified specialists as it speeds up the process, helps to know how to finance the company to grow and facilitates obtaining better conditions.
What elements should this plan incorporate?
These parts must always be present and well developed:
Executive Summary: Description of the business, the objectives to be achieved, a value proposition and what its key achievements would be.
Clear business description. Specify precisely what your company does and what differentiates it from its competitors. This is the mission, vision and values. It is also important to specify its legal structure and its location, among others.
Analysis of the situation and the market. Evaluate the context, the circumstances that affect your activity and your competitors. Avoid focusing only on the current moment and incorporate a reliable prospection of future developments.
Marketing and commercial planning. Develop how you are going to promote and sell your organization's products or services. It is important to devise a good marketing plan to achieve the set objectives.
SWOT Analysis: This type of analysis shows the weaknesses, threats, strengths and opportunities that the organization may have throughout its activity.
Financial Projection. Present your income and expense forecasts, in addition to the possible evolution of the treasury.
Management team: Presentation of the key management team and their background.
Expansion plan. This specific section must be written when you intend to receive financing and what the possible sources are.
3. Do you want to obtain financing for your growing company?
The procedure to follow is developed in several phases. Synthetically, they could be these:
Prepare the business plan commented and investigates the market around it.
Seek, find to investors suitable and consider other interesting financial alternatives.
Present a proposal attractive.
Negotiate the agreement and its terms.
Make sure you comply with the requirements
Sign, receive the money and manage it responsibly.
Establish ongoing relationships: Maintain regular communication with funders and establish strong relationships.
If you would like to explore more related topics or have specific questions, please do not hesitate to contact Workcapital. We are here to help you on your entrepreneurial journey!
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