How to Grow Your Business Without Borrowing Money
December 16, 2020 Comments Off on How to Grow Your Business Without Borrowing Money Business, Finance, International, Other Priya SahaThere are ways to grow your business using your own capital.
Businesses that take on debt in order to grow faster may see a decrease in their growth potential later on when they need to cover that debt. This can be compensated by a stellar business strategy, but it also requires a good dose of luck with the market situation.
Prioritize clearing existing debt first.
Needless to say, if you’re in some debt because of your business operations, your first priority should be to clear it out. Debt can become an increasingly more frustrating burden as time goes by, especially with the typical business interest rates and conditions.
It might seem like an attractive idea to postpone the repayment of that debt at first until your business is more financially sound. A few quick calculations, however, tell you that deferring it by even a few months can increase the amount you’ll payout in the end significantly, resulting in increased losses. Even worse, those losses can hit you at the most unpleasant time possible, like when you’re trying to grow fast.
Analyze your current expenses.
You would be surprised how much you can discover by digging into your current finances and analyzing what you’re spending money on. There are advanced analytical tools that can help you see connections that you might otherwise miss.
Machine learning – and artificial intelligence in general – has been at the forefront of making this possible. The best part is that you don’t even need to be an expert in the field to take advantage of what it has to offer these days. There are complete packages aimed at commercial users that can go through your entire operations and give you hints on what might need optimizing.
Streamline and optimize.
Streamlining the operations of a company of any size can often lead to significant growth opportunities without having to spend any extra money. Look into Lean and Six Sigma for good starting points for complex optimization approaches. They might seem overwhelming at first, but there’s a good reason why these fields exist. There are also specialists available for hire who can guide you through the process. And in most cases, spending the money on one could improve your financial situation in the long run.
Temporarily boost income.
Another good angle to consider is boosting your income temporarily in small bursts. This can be done in various ways, depending on your business model. Discounts and promotions are always a solid choice if they are applicable to your business model, and they may result in strong long-term engagement. You should also consider raising the prices of products and services that are selling well, though, of course, this should be aligned with your future business plans. You don’t want to kill an attractive product just for a short-term boost to your finances, as attractive as the opportunity might seem sometimes.
You can also temporarily shift some resources around, and reallocate more toward certain streams to maximize productivity at the expense of other factors. Again, this is something that should only be done with a temporary mindset, and you should have a clearly defined plan for returning back to normal after some time.
Diversify your portfolio.
In many cases, you can explore introducing new products and services to your current line to complement what you already have. And when that’s not possible (or doesn’t make sense for your current business model), you can look into expanding into completely new markets altogether. (Of course, this is something that should be done with a lot of caution as it can easily backfire if you’re not careful about it.)
Times change, and you have no guarantee that your offer is going to stay relevant tomorrow. It’s a good idea to position yourself in a way that allows you to continue to profit even if your flagship product starts to flag in popularity. But, of course, this is something that should be planned very early on and can’t be used as a Band-Aid solution. That’s why it’s so important to keep the long-term picture in mind when making such plans. Don’t necessarily look at what your competitors are doing in this regard either. Focus on the unique resources that you have available, and think about how you can leverage them for a new business venture.
Look at companies like Facebook, for example: With a declining position on the social media market, they have started to expand into completely new markets, such as virtual reality and gaming.
Partner with others.
There is a potential benefit in partnering with other companies, whether those companies are in your own field or not. As long as you have the resources to work with a partner and hold up your end of the deal, you could see some great benefits in your operations. This can be a double-edged sword. If you make a wrong move, this can cost you severely and can sometimes have a negative impact on your finances in the longer term. Partners like Nexa.com can help you realize significant reductions in your expenses without having to sacrifice too much of your current setup.
Finance without debt.
Financing doesn’t always have to happen on the basis of debt. There are other opportunities available that you should definitely explore as much as you can. Government grants, and similar programs, are a good example. Look at what’s available, and you might be pleasantly surprised.
Get an advisor on board.
This is another example of an expense that can pay for itself in the long run – just like hiring a Lean/Six Sigma specialist – like we described above. There is a lot to gain from the services of a financial advisor, especially if you have been directing your operations entirely on your own so far.
Certain mistakes aren’t immediately obvious, and you need someone to point them out in order to see what you’re doing wrong. Even if they don’t find many issues with your finances, you can gain peace of mind knowing that you’re moving in the right direction.
Adapt to a slower growth rate.
If you want to grow without borrowing money, an easy way to approach the situation is to lower your expectations in terms of growth rate. This might sound bad, but it just requires a bit more patience – and the ability to remain stable over a longer period of time.
If you stretch your goals a little bit, you can improve the rate at which you’re utilizing your resources and save more in the long term. You can then invest those savings back into your operations and see some steady growth over a certain period of time.
Avoid physical expansion.
Last but not least, try to avoid the physical growth of your business as much as you can. It can seem tempting at first to expand into new locations and attract even more people to your workforce as your business starts to grow, but this can quickly bury you in additional, unexpected expenses.
Growing your business without taking on debt is entirely possible, but it requires more attention than your typical business operations. It can also be riskier, depending on the situation but more rewarding in the long run.
If you play your cards right, you can easily find yourself in a much better position compared to a similar business funded through loans – and you’ll be able to continue growing at a faster rate while other business owners are stuck thinking about repaying their debts. But until then, you need to arm yourself with a lot of patience.