In particular, a company that has been active in an industry for a long time has a loyal customer base, and the business is going well but does not necessarily see an advantage in growing. Some shy away from the risk. Some others are simply satisfied with the status quo.
Problems arise, for example, when one or even more customers switch to the competition that has suddenly advanced into the industry or market.
The company growth, therefore, serves several purposes.
Increase in profitability
If a company wants to remain profitable, sales should develop steadily upward. To ensure this, either productivity must be increased or costs reduced. In some cases, the efficiency or productivity increase in the long term even though of a cost reduction, e.g. if production plants are modernized with the help of loans for business equipment that consume less energy or require less manual actuation.
Company growth makes the company more valuable
If a company grows, it gains value. For example, if you want to convince investors of yourself, increase your reputation or show the competition that you can take on it, the company growth sends the right signal for it. In this way, you also show business partners that you firmly expect them to be active for a long time in Industry and important partners.
Jump to the top of the market.
If a market is highly competitive, the company that can grow the fastest often wins and thus wins the most customers. If you are already a market leader, you can further expand your lead over the competition through growth or look at new markets in which you could position yourself with your product range or a new product.
What opportunities for growth financing through debt capital do small businesses have?
Since there is not always enough equity capital available to finance company growth, debt capital must be raised.
We will show the available option to you in this section.
Leasing of capital goods
In the classic sense, this is not the raising of debt capital but contributes to company growth and is mentioned here.
You do not take out a loan but conclude a contract with leasing partners and rent the required production facilities or vehicles that you need for growth. Depending on your growth strategy, you can then combine this form of investment with others.
The advantage of leasing is that you should not take a loan to buy all purchases.
However, there is often a long contractual commitment, which can become problematic if the leased goods do not contribute to growth in the desired form, or if they become obsolete due to the restructuring of the company.
Bank loan
The classic form of credit should not go unmentioned here, either. Depending on how good your creditworthiness and your connection to the house bank are, it can accommodate you in good conditions. When applying for a loan, all relevant documents from your accounting department will be carefully checked.
Usually, a bank also requires the deposit of collateral. If you take out a loan for growth, for example, because you want to invest in new machines, the bank will most likely demand this as collateral to hedge your risk.
Conclusion
The growth of a company can give it many advantages. It thus increases its profitability through higher productivity or access to new markets where new customers can be won.
Invest in the growth of your company, and show the competition and your business partners that you are doing everything you can to be present in the market for a long time.
In order to avoid taking out very high loans, you can look at whether the goods leasing is suitable for you, for example, if you need new machines or want to expand your fleet.
Financing by bank loan, such as business cash advance loans, is still the most common form of borrowing. The deposit of collateral is usually unavoidable here.
With crowdlending platforms, this is sometimes completely eliminated, and you benefit from shorter processing times for your loan application. In addition, you can also realize smaller growth projects during crowdlending, for which no large sums are needed.
Disclosure: If we like a product or service, we might refer them to our readers via an affiliate link, which means we may receive a referral commission from the sale if you buy the product that we recommended, read more about that in our affiliate disclosure.
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