Mastering Business Expansion: Tips for Growth
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Three Savvy Ways To Fund The Purchase Of Your New Business
Adam Coffey - Founding Partner The Chairman Group?
Securing funding is a pivotal step in purchasing a new business. While traditional bank loans are common, other routes might be necessary for entrepreneurs without significant capital.
Here's how you can creatively finance your next business acquisition:
???Bank Loans: Assess if the business meets the debt coverage ratio (DCR) standards for bank loans, typically 2:1. Remember, banks require a 20%-30% down payment and a good credit score.
???SBA Loans: Opt for Small Business Administration loans if the DCR is below what traditional banks find acceptable—the SBA's threshold can be as low as 1.2:1. SBA loans require a down payment and often a personal guarantee.
???Seller Financing: Consider negotiating with the seller to roll over part of the equity, reducing the amount you need to finance. This can improve your DCR and decrease the required down payment. Check if the SBA or commercial banks allow this option.
Before venturing into purchasing a business, partner with professionals like business attorneys and M&A coaches to guide you through the financial and legal complexities.
Three Lessons Learned From Starting A Business In The Great Recession
?? Bianca B. King - President & Creative Director Seven5 Seven3 Marketing Group , Founder & CEO Pretty Damn Ambitious?
Launching a digital marketing agency with just $700 during the 2008 recession, the founder of a successful agency shares valuable insights gained from overcoming adversity.
These lessons are not just about business growth but about personal resilience and innovation.
Explore these key takeaways below:
???The Art of Bootstrapping: Starting with minimal resources taught the importance of maximizing every dollar. Learning to negotiate, swap services, and manage multiple functions personally were critical in transforming a modest investment into significant returns.
???Value of Relationships: Support from loved ones and mentors plays a crucial role. Building strong relationships was foundational, providing both emotional backing and practical opportunities.
?? Constant Learning: Embracing continual education helped navigate through rapid industry changes. Staying curious and open to new information fueled innovation and adaptation, proving that being "foolish" enough to keep learning is vital for sustained success.
Funding Your Business: Bootstrapping Vs. Fundraising
Jonathan Treble - Founder & CEO WithMe, Inc.
Determining whether to bootstrap or seek external funding is a crucial decision for entrepreneurs.
Each financing path offers distinct advantages and challenges, and the choice largely depends on the nature of the business, the industry, and the founder's vision for growth.
Here are key points to consider:
???Bootstrapping: This method involves using personal funds or the business's early revenues to support growth. It allows founders to maintain complete control and ownership, but due to limited financial resources, it may result in slower growth.
???Fundraising: Seeking external capital accelerates business growth and expands operations quickly. However, it often requires ceding some equity and control to investors, which can later influence business decisions and strategies.
?? Industry Impact: The industry you operate in can greatly influence your choice. For example, tech startups might require significant upfront investment, making fundraising necessary, while service-oriented businesses might succeed through bootstrapping.
???Long-term Vision: Consider how each funding method aligns with your long-term goals. Fundraising might bring quicker success but includes potential conflicts with investor expectations, whereas bootstrapping allows for more sustained control over the business trajectory.
Each funding strategy has its path and implications. Evaluate your business model, growth targets, and personal risk tolerance carefully. Engaging with experienced mentors can also provide valuable insights as you navigate this foundational decision in your entrepreneurial journey.
Wrapping Up
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Helping women leaders achieve success with joyful ambition | Marketing Strategist | Contributing Writer: Forbes, SUCCESS, Entrepreneur + Fast Company | Forbes Business Council Member | Speaker
1 个月Great insights. Thank you for featuring my article; I hope it's helpful to someone who is starting a business.