Tue, 26 Jan 2021

How to Finance Business Expansion

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29 Dec 2020, 01:24 GMT+10

Image source: https://www.pexels.com/photo/person-holding-a-green-plant-1072824/

If your business is on the verge of expanding into new markets or opening up new branches in different locations, you may have to deal with managing the resources you need to initiate such a move. Expansion creates new opportunities, but it comes with a hefty price. As your business widens its presence, you will find a lot more work to be done in terms of acquiring new office space, hiring additional manpower, and transitioning to a new legal structure. All of these will depend on the amount you can shell out to sustain your finances. Here are a few tips to help you finance your business as it ventures into new territory.

  1. Apply for a loan

For most businesses, applying for a loan is the best option if they need access to cash for spurring growth. If you are planning to move to a larger office facility or increase your productive capacity by acquiring new employees and equipment, then a loan would be ideal for your situation. The only trade off, however, is the amount of interest you will need to pay. The rates may vary from time to time, so make sure to do research on certain loan products and find the best deals.

  1. Negotiate for better leasing terms

When it comes right down to leasing out the best office space in a high-opportunity market such as Los Angeles or Orlando, you will need to work with commercial real estate experts to help you settle. For the past few years, the commercial real estate sector has seen a significant increase in sales transactions. You will be lucky to find prime commercial space on your own, but in most cases, you will have to seek out firms that help tenants find office spaces and negotiate leases. Paying less in rentals can help maximize the bottom line.

  1. Consider an IPO

An initial public offering allows you to sell shares of your company to public investors. With a ready pool of investors, you can easily finance projects and campaigns that support the growth of your business. However, the tradeoff to generating funds from public investors is that your business has to abide by the rules and regulations maintained by the Securities and Exchange Commission. This would mean opening the books, preparing monthly reports, and paying more for accounting and legal services. With that being said, an IPO would be more effective if you already have enough resources to cover the overhead costs.

  1. Diversify your income sources

If you have a long-term goal in mind for your business, you might want to consider short-term income-generating activities on the side. If you own a cleaning business in Texas, you can increase your profitability by upselling cleaning products to your clients. If you provide consultancy services, you can consider selling e-books or access to video courses or podcast series aimed at your niche. With a bit of creativity, it will be easy for you to open up new income sources that will help finance your expansion.

Do not let your business stagnate. If you want to secure long-term success, then consider the tips above and let your business snowball into something bigger.

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