A business expansion is a major procedure. It doesn’t matter how big your business is, expanding is an expensive and risky process. If you want your expansion to go off without a hitch, you need to fund it properly. In our article “How to finance your business expansion” below are three options for finding the cash you need and making your business expansion an affordable option.
Savings and credit
Before you give the final go-ahead for any business expansion, you should have a good grasp of your business’s current financial health. You don’t necessarily need to have enough cash in your savings to fund your entire expansion; you can always dip into your credit if you are confident that you’ll make the money back. For SMEs, putting some of your costs on a credit card is a viable way of bridging the gap between your savings and your expansion costs. Just make sure that you can pay it back on time.
Apply for a bank loan
When businesses need cash, one of the most obvious options is to apply for a bank loan. Banks can provide businesses with both loans and credit lines; both of these can prove invaluable for any business requiring funding in a hurry. Banks are a great source of funding because they are generally willing to offer fairly large amounts with relatively low interest rates. The main drawback to applying for a bank loan is that the requirements are stringent. A bank won’t loan to you unless you have a watertight business plan.
Expanding is a delicate process for SMEs. Large corporations with ample cash to cash to burn will usually be fine if their expansion goes awry. But for smaller businesses, any mistakes you make that significantly increase your costs can pose an existential threat to your entire business. Instead of investing in brand new equipment for your new location, you can save yourself quite a bit of money by leasing instead. Under a leasing arrangement, you essentially rent the equipment you need. You have most of the benefits, and responsibilities, of full ownership, but you will pay a regular fee rather than paying the full amount upfront. Every business expansion requires proper financing. You shouldn’t embark on any kind of expansion unless you are certain you can cover all the costs involved.
How to finance your business expansion – find out more
Tower offers a full range of finance solutions – products and services aimed at business development and growth. Regardless of how much capital you need or how big you are as a company we can normally help. Read about our business finance solutions or get in touch to discuss how we can help you expand your business.