Staying in business is a significant challenge for many new companies. You may need for an influx of capital during periods of slow revenue. More often, however, you may need more cash because things are going well. If you are chasing to keep up with the demands of your business, it may be time to seek new funding.
1. You Want to Expand
If you run a small-scale construction company with a great reputation, it may make sense to start a new branch in a nearby city. Going into a new market can help your business to grow, but you need cash to get off the ground. New capital lets you set up overhead, purchase materials and hire labor until the new location becomes self-sustaining.
2. You Need New Technology
Most people bootstrap their first businesses and don’t invest right away in auxiliary technology to enhance services. But as time goes on, it may be necessary to improve back office efficiency to bring in more revenue to the business. If you need an upgrade, it may be a good reason to get a new source of funding.
3. You Can’t Fulfill Demand
Refusing customers is a happy problem — unless you put them off so long you they never come back. When demand eclipses supply, you should do all you can to fulfill orders and take new ones. This may require getting new capital so you can hire employees, buy materials or manufacture new product.
4. You Use High-Interest Debt
New capital may come from a variety of different places, including your bank investors or a factoring service. If you are reliant on credit card debt to fund business operations, it is time to give your budget an overhaul. With the assistance of a business financial expert, you can find a less expensive way, such as factoring, to keep your company going and get back in the black as soon as possible.
For most companies, reinvesting profits often does not provide enough wiggle room for you to seize new opportunities and expand your operations. Looking at possibilities for new capital can drive your business into its next phase of development.