Growing a business is always a challenge, but if you also have limited funds and a model which involves rapid growth then you have a real issue to resolve.
A growing business needs capital to fund it, commonly known as working capital, this is the money the business needs on a day to day basis to pay its bills as they come due, if your product or service is very popular and demand for it is high then you need to be to be able scale up quickly.
Scaling up means: –
- Moving to larger premises
- Expanding your sales and customer services team
- Growing your marketing
- Investing more in R&D
- Bringing in experienced managers and directors
- Investing in stock if your product is a physical one
- Making all the usual statutory payments such as sales and corporate taxes.
Even if your business operates with a very high profit margin, if you grow by high factors such as tenfold there is no way to finance the above expansion without an injection of significant funds.
Costs of doing something and costs of not
There is an expression in business, there is a cost of doing something, but there is also a cost of not doing something. This means that you can miss the opportunity your product has in its marketplace if you are not there and ready for it.
So for example your product may grow very rapidly in the USA but miss out entirely on the potential market for it in the UK and Australia just because you are not in a financial position to enter those markets, someone in the UK may copy your service and launch it locally, thereby making it harder for you to then enter that market.
Companies who are first to market always have an advantage, but you can’t launch in multi-places at once unless you have enough financial resource.
Unless you have access to significant capital already then it is worthwhile exploring the options for Venture capital funding. VC’s invest in early stage companies and provide funds for growth which means you can make the most of opportunities your product or service has and before the opportunity passes you by.
Finding a suitable VC
This is not an easy task, whilst there are many funds around, some are very focussed onto locations such as London and others are specialised into sectors such as Technology.
A great list to start from if you are UK based at least can be found on the popular Reporting Accounts site, reaching out to and getting in-front of a VC house is something of a challenge in itself but if you product and team are good you should be able to get an opportunity to make your pitch and with luck get the funds you need so you expansion plans to achieve their potential.