Your start-up is no longer a start-up. You are on the threshold of building a potentially lucrative business, but you are at a fork in the road where funding your business is concerned. The business is thriving and makes enough money to clear your overhead monthly. However, pretty soon you will reach a tipping point where you must expand or implode from lack of resources.
Resources cost, though. Expanding a business is costly, especially if you are working out of a major city. You could take on debt to cover your expenses until the business can fund itself, but you do not want to be hock, even for a little while. Thankfully, the current business climate is flexible enough to provide you with debt-free options.
For tips on how to avoid taking on extra obligations when expanding, continue reading below.
Alternative Leasing Options
One of the best ways to avoid the debt trap is to expand in a way that allows your business to grow comfortably. You would think that relocating to another building would be a natural part of expansion. However, relocation can cost your business thousands of dollars in the initial move and in monthly costs, which almost mandates you take out a loan.
Alternatively, a better solution would be to go with an office solutions provider that can reduce some of your overhead. With Servcorp office space for rent, you are typically offered your standard executive suite office, virtual office and co-working office plans at a fraction of what it would cost with a conventional lease. Furthermore, many of these types of leases are scalable, so let’s say in three years your business grows significantly, your lease can be modified.
Keep Overhead Low
While your business is growing, you might be tempted to invest in all of the shiny, new technologies that are available today. However, you have to balance this with also keeping your daily maintenance costs low. A couple of ways to keep these monthly costs low are to look for leasing options that include amenities (utilities, internet, cable, etc.). Also, avoid overly expensive perks including travel and other business expenses that can add up over time. Look for bargains that will help in the area of reducing the amount you spend monthly.
Seek Alternative Funding
Leave no stone unturned when looking for sources of funding to help your business expand. One of the easiest ways to secure funding is to reinvest your earnings back into the company, which might mean you will have to skip that overpriced holiday, but you and your bank book will be happy in the end. Other ways you can find funding is to look to angel investors or crowdfunding to support your expansion efforts.
While not conventional debt, angel funding typically involves getting funding from a wealthy investor in exchange for equity in the business. Crowdfunding involves raising money through partnering with a number of people who donate a small amount of money to the pot. While both options help you avoid debt, crowdfunding might be more advantageous because you do not have to give up equity in your business, which is kind of like taking on debt.
Draft a Budget
Keep a tight budget that tracks your spending from month-to-month. Every month, review your budget to find creative ways to fund your business and save money. Look for areas in the budget where you spend unnecessarily.
Debt-Free Growth Can be a Reality
Growing your business without taking on obligations is possible. While banks might woo you with promises of low interest rates and credit cards might offer you low introductory rates, there is nothing like reaping the rewards of your earning without having other obligations. The reality of expanding a business without debt begins with planning your plan.