Are you struggling to hit your company’s growth targets?
Do you need access to capital but feel confused about how to go about it?
Are your funding goals long term or short term?
Do you know what timeline you need to repay the funding?
As a minority business owner . . .
. . . you’ll find these questions (and more) are critical to answer when seeking funds to grow your business.
This article will help you develop a strategy to acquire funding so you can expand your business.
This 7-step strategy will help you gain a substantial advantage over your competitors.
7-step strategy to fund for growth
While every company’s situation is different, answering the questions below is essential to creating the right strategy for acquiring funds to grow your business.
1. What type of capital do you want?
Do you want a loan? If so, would it be a short-term or a long-term loan?
A short-term loan is often called a “bridge loan.”
You might use a short-term loan to pay for:
- Current expenses
- Payroll
- Taxes
- Training/certification
- Conventions
- Promotional materials
- Rent
You might use a long-term loan to pay for:
- Refurbishing or buying a plant or building
- Hiring additional staff
- Creating a new marketing campaign
- Acquiring hardware and software
- Relocating staff or equipment
Or perhaps you need equity capital for one of the following reasons:
- Purchase a new business venture
- Expand through acquisition
2. Why do you need the capital?
You need to consider the intention behind the need for the capital. Perhaps you will use it to pay for:
- Old debts
- Immediate expenses
- Payroll
- Taxes
- Merger or acquisition
- Marketing campaigns
- Hiring staff
- Equipment
3. What is your timeline to repay the funds?
If you have debt capital, how long do you want to make those payments?
Is your time frame 12-36 months? Or is it more like 5 years? Or 30 years?
What kind of APR are you comfortable with? 5%? 10%? 20%?
4. What type of investor do you need?
When you’re seeking funds to grow your business, you’ll most likely consider the following three sources:
- Investors who have high net worth. If you don’t have the funds to start a new venture, “angel investors” can provide the capital to seed the venture.
- If you have a favorable credit score and healthy revenues and assets, you’ll have a great shot for acquiring favorable terms and rates from an investment bank or a commercial savings and loan company.
- Alternative lenders. If you don’t have a favorable credit score, assets or revenues, an alternative lender is the way to go.
Keep in mind that with an alternative lender, you may not get the most favorable rates compared with those for bank loans. But you’ll have a way to gain access to funds to cover invoices, payroll and current expenses because of the work you’re doing with a commercial entity or with the government.
5. How do you work with investors?
If you need to approach an individual investor, you’ll need to create a pitch deck and a business plan, including your team bios, years of experience, how you’ll return the money, etc.
This will help get your seed money so you can start your new venture.
6. How do you approach banking institutions?
If you decide to approach a banking institution, you’ll need to fill out an application.
The application will ask you to provide documentation for several items, including tax returns, income statements, bank statements, etc.
Having these documents prepared ahead of time will show the bank you’re ready to work with them.
If you’re not sure what you’re missing, you might need an experienced business consultant or advisor.
7. Are you ready to agree to the terms?
It’s time to agree to the deal.
Being ready to sign a loan agreement requires that you’re comfortable and clear on your needs, goals, timelines, and purpose.
If your minority-owned business needs alternative funding resources for commercial growth, this article is a good place to start.
Risk-free funding? Retainer fees and commission?
When choosing your source of funding, you’ll have two main options to consider:
- Risk-free funding
- Retainer fees and commission
Most funders don’t charge success fees.
Instead, they charge retainer fees upfront and earn commissions after the closing.
This means you’re paying for a service . . . whether you receive funding or not.
On the other hand, some services charge success fees.
Success fees are paid only when you get successfully funded.
You don’t pay upfront—you only pay when you have been successfully funded.
You never pay a retainer fee for a service that doesn’t work for you.
That’s the key benefit of risk-free funding.
Is your minority-owned business getting ignored (or rejected) by potential funders or customers?
Losing out on business opportunities affects your financial goals, relationships, and even mental health.
But it doesn’t have to be that way.
Although it may feel like you don’t have control over the situation, you do.
Most minority business owners have no idea about the special resources available to them, provided both by the government and by private organizations.
The first order of business is to enlighten yourself about the opportunities available to a minority-owned business so you can grow, thrive, and shine.
Ready to take the first step?
Please go to my Calendly and book a 15-minute call.
Our discussion will:
- Review your current situation
- Use targeted questions to see if we are a potential fit
- Discuss your current challenges and why things haven’t worked
- Consider what you are trying to accomplish
- Decide whether a 45-minute discovery call is necessary
All your contact information is secure and confidential.
Once you fill out and submit the form, you will get a confirmation email with a Zoom link for our discovery call.