How Growing Companies Can Tap Banks for Financing
There comes in the life of your company that orders come in regularly, and you cease worrying (at least not as much as before) about where you’re going to get more sales. You are at that point where you start to attract more customers, and they come knocking at your door. At that point, you’re considered a growing business.
Unfortunately, you also attract competitors. Success begets more success, but that success may not be yours, but for your competitors.
Remember: A competitor with the same competence as you but with better financing can kill a growing business.
Why Growing Companies Need Financing
I remember this contractor who supplied blocks to top real estate developers. Their blocks were favored by these companies, as it proved itself to be cost effective over the life of the building , despite a higher upfront cost. The owner was really happy with his business, and with his initial investment, he kept the business on track.
His business was really profitable, and because of that, it attracted several competitors. At first, this didn’t have much of an effect in his business. He was content and confident that no matter what these competitors do, he can take care of it.
Problems began when he suddenly got offered a huge order for his blocks. He had to refuse it: he can’t possibly afford to manufacture such a huge number.
Because of that, he created an opening for his competitors to actually enter the market. This competitor eventually took larger and larger orders from him.
Now he’s back to worrying about where his next orders will come from. He lost a big chunk of his old business, with that competitor taking over his old customers.
3. Things to Do to Get the Financing You Need
While there are core things you need to do to get financing, which I outline in my book, there are three things I want to highlight. You should pay careful attention to these three, so you would have an easier time in raising the money you need.
1. Sit down and plan for your growth
Things are different for your business when you are ready for aggressive growth. Just like the business we talked about earlier, you would have been less worried about where to get new sales. At that point, you would have the time to take stock and really plan where your business would be in terms of products, customers or even markets in the next few years.
I’ve helped companies craft their financing plans, and in a future post, I’ll give you an overview of how we do it.
2. Craft your growth story
Your growth can’t be simply about numbers. Most growth plans need outside money to execute. Because of this, you should be able to sell your growth plan as a kind of a story.
Be able to tell your funders an exciting tale of how you started your business, the success you have experienced, and how they can take part in your success in the future.
3. Emphasize your best customers and past performance
As a growing company, your customers may be better known than you are. Learn how you can leverage their reputations and your past transactions with them.
If possible, ask for recommendations. That could go a long way in establishing trust with your potential funders.
Conclusion
Growing companies need to scale, or their markets and customers may be taken away from them. Getting the right financing is crucial to the success of any growth. Learn how to get it right, and you’ll succeed.
I’ve been helping clients do just that. Together with my team, we have raised hundreds of millions of pesos for our clients. If you want to know more about how i do it, you can download my ebook through this link.