Leigh Riley of Your Business Succession offers her top seven ways to raise capital, to help fuel business growth or cash up a business for an exit.
If cash flow is the lifeblood for your business, then capital can certainly be likened to the nutrients and fuel building blocks necessary to expand and grow your business. No matter how well stocked you are with capital for your business, sooner or later you are likely to want more to fund expansion plans. The trouble is, traditional financiers just aren’t willing to take the risk of lending to business since the Global Financial Crisis (GFC)l
So what options does that leave you to fund your business development or expansion plans? Where can you find funding to help you release your equity if you want or need to exit?
Here are seven capital-raising options:
1. Self Fund: Let’s face it; if you could comfortably self fund, you probably would unless you wanted to diversify your personal risk exposure.
2. Family and Friends: Your family and friends could be approached to chip in, but even if they do have the financial resources, it usually won’t be long before you exhaust your options here.
3. Employees: You could invite your employees to participate in your business success and growth through an employee share ownership plan which would provide you with some capital to fund expansion, and release your equity.
4. Government grants: funding may be available to assist in the growth of your business, particularly for innovative projects, but these are rare, often difficult to access and can be laden with restrictions inhibiting your entrepreneurial flare.
5. Investors: Attracting investors or venture capitalists (sometimes described by some as ‘vulture’ capitalists) is another useful option but can be difficult to organise and place you under a lot of pressure to perform in a very short space of time. Most will not consider investing in your company unless you can tick all boxes on a detailed list of criteria including a clearly defined and formalised exit strategy.
6. Listing: The stock exchange is the most expensive and time consuming way to raise capital for your company and is usually out of reach for the typical small to medium sized enterprise.
7. ASSOB: There’s a new and easy capital raising technique that smart entrepreneurs use to list their company on the Australian Small Scale Offering Board. I call it the Claytons listing – because it’s the listing you have when you don’t wish to go to the trouble or expense of listing your company. It provides, for the first time ever, a mechanism facilitating liquidity and capital raising for small to medium sized companies that were previously only within reach for very large companies.
There are six main prerequisites for successful small scale capital raising and listing that you must have:
1. A great story to attract investors to your company
2. An event to launch your story
3. Undeniable credibility
4. Lots of fans and followers to help spread the word about your company
5. Passion and energy
6. Desire to raise capital of between $250k and $5million
If you’d like to know more about How Smart Entrepreneurs Raise Capital Easily to GROW or Go from their business, sign onto the FREE webinar at http://YourBusinessSuccession.com/CapRaising-webinar.php . I’ll be interviewing special guest and capital raising expert, Anthony Puls, live from Sydney Australia. You really can’t afford to miss this FREE session if you want to raise capital to expand your business and profit or to release equity.
Register Now for the FREE webinar at http://YourBusinessSuccession.com/CapRaising-webinar.php
Two timeslots offered: Date: Wednesday 5th October, 2011 at 7.30pm or Thursday 6th October, 2011 at 11.30am
Ask “The Exit Experts” how you can qualify to receive government assistance to take control of your capital raising and formulate your business succession plan. www.YourBusinessSuccession.com 1300 499 225
Taking digitisation out of the ‘too hard’ basket for SMEs
By Jason Brouwers
The insanity of consumer expectations
By Jason Dooris
Forget how big you are: always have a start-up mentality
By Simon Larcey