Expert Insights: When is the right time to seek capital for my business? What should I do to position my company for growth?
August 17, 2018
When is the right time to seek capital for my business?
When you really don’t need it. Having capital gives you flexibility and is more likely to be available if you don’t need or want it immediately.
The process of securing financing invariably takes longer than anticipated. Traditional lenders can take months to evaluate your credit request, and more equity-driven approaches easily require a year or more to complete. Unforeseen headline events can also impact the availability of financing aside from simply your company’s performance.
The exercise of meeting the people and working through the process is also healthy for your business even if you never access the funding you’ve identified. Developing a financing plan will not only help you tell your story in a precise and forward-looking manner, but likely will lead to improved financial insights. You’ll also gain valuable intelligence about your competition, the value of your business in the marketplace, and the choices you have once you do need the money.
What should I do to position my company for growth?
- Develop a strategy for the future of your business. Couple it with a detailed execution plan. As part of that effort, identify the core competencies of your organization as well as your competitive landscape. How is your sector evolving—what are the threats inside and outside your business sector that could affect you?
- Include actions necessary to deliver on your strategy in your plan. What changes operationally will be needed? Identify those ultimately responsible for successful execution along with a timeline for implementation. Track your success in meeting key strategic initiatives and celebrate accomplishments and learn from missed opportunities.
- Communicate your strategy. You and your company’s leadership need to fully understand your strategy so it becomes reality. Put it in writing, update it at least annually, and communicate it to owners, managers, employees, and other stakeholders in a manner that is understandable, engaging and motivating to those you count on to make it happen.
- Finance for the future, not the past. Consider available capital another weapon in your arsenal, like a new product or territory, to ensure that your business can continue to grow successfully. It’s always a good idea to put cash aside, or raise money when you don’t need it, for planned initiatives or expansion opportunities that come along unexpectedly.