Smart Alternatives to Raising Capital - Part Two
Alternatives to capital
Before you jump into researching the different sources of capital that are available, first consider the alternatives. It could be that, depending on what your growth goals are, you do not actually need extra capital, you just need to be thinking a bit more creatively.
For instance, can you barter with fellow businesses for goods or services? Maybe you have an excess of stock that you know you will never need. If someone cannot pay cash, they could either pay you by doing a few hours of work for your business or they could make something you could sell. This is the time to get creative.
Capital to grow sales
If your main goal is to increase sales, you do not always need extra cash to be able to do this. There are other options that can help your sales numbers and it is worth looking into them before you go borrowing money.
Strategic alliances are often worth checking out. Business owners are increasingly discovering the advantages of joint ventures and strategic alliances and many experts see strategic alliances as one of the best paths to rapid growth. There are many ways in which you can work with other businesses or people, ranging from short-term joint ventures to more formal long-term commitments. You can form strategic alliances with suppliers, with customers or with complementary businesses or with non-profit organizations such as charities. Think of how often you see a Subway attached to a service station.
It might also be worth looking at updating your business model. A change in your business model might help you find new opportunities for growth to increase your business’s revenue. Direct selling is the shortest route between your business and its customers. It involves buying directly from you without any go-between. It is probably the simplest and certainly the most direct business model.
Like many businesses, you might currently sell some items through the web but is it time to make a bigger investment in the online world? Global eCommerce is rising daily and the opportunities for growth are significant.
Whether you want your goods distributed widely through wholesalers or via carefully selected retailers, the tweaks you can make to your distribution channels are almost limitless. If you are a retailer, you might consider also selling at the wholesale level, and vice versa.
Capital to expand
Your goals may be more focused on expanding your business and you’re considering how to increase your capital to do this. Before you borrow the funds you need, consider other ways of achieving expansion.
For example, look into leasing equipment instead of buying it. If you want to boost your capacity so you can handle more orders, that does not necessarily mean you have to fork out for the additional equipment you will need – you can lease it. The monthly lease payments are often less than what loan repayments would be. You can also lease equipment only when you need it, rather than having it sitting around gathering dust and being unproductive when you do not.
It is also worth looking into contracting out some work, especially for large projects. Contractors will often have all the resources they need to handle work, and when you bring them on board you are getting access to those resources.
You could also consider forming partnerships to jointly produce your goods. For example, if you manufacture coffee tables, you might align your business with one of your suppliers, making it cheaper to get the raw materials you need.
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