Investment Choices for Your Business Growth

How Will You Invest in Your Business? Make A Practical Plan for Business Growth

Building your business is all about finding the right way ahead, the pace which suits, and recognising opportunities when they become available. But how do you know which is the right direction? Or if that unexpected opening is one you should jump into with both feet?

When it comes to the question of business growth and financial investment, there are lots of considerations. In this article, we will look at what you what you need to consider – helping you take the first steps towards finding the right answer for you.

Business Investment: The Options

You may have seen our previous blog, Investing in Your Business: Starting on the Right Foot. This piece was written to help businesses starting out, with a focus on identifying which early outgoings are beneficial to support your growth.

Well, now your business is making money; you’re beginning to see success with happy clients and successful sales – so what comes next?

If you keep doing what you’re doing, we would hope your business will keep expanding. This is organic growth which can shore you up with strong foundations, but it can take a long time to see substantial progress from organic growth.

Investing financially is an injection of capital to fund more direct growth – with a focus. This can seem like the obvious next step, but is it? In this blog we’re going to look at the things you need to consider before you make that decision to invest, and we’ll also explore the investment options available to you.

 Your Business Plan

We’re going to start where business strategy often starts, asking the question “How does this fit with our business plan?”

Investopedia tells us, “A business plan is a written document that describes in detail how a business—usually a startup—defines its objectives and how it is to go about achieving its goals. A business plan lays out a written roadmap for the firm from marketing, financial, and operational standpoints.”

Your business plan should outline your considered goals and the roadmap to reaching them. Having such a document allows everyone involved in the business to recognise opportunities which align with it. When considering your future growth, therefore, understanding how any new opportunities sit alongside your plan is crucial.

 Step one is to review your business plan.

But what if you don’t have one? Or, as many businesses have found following the necessary pivoting of the last two years, maybe your path has moved away from your original plan.

If this is where you find yourself, it’s worth taking this opportunity to (re)establish your plan. There are many resources online or places you can find the help you need for this. Within our networking groups you’ll find a number of chartered management accountants who specialise in business and cashflow planning or business coaches with the experience to help you.

 Creating clear goals and objectives for the growth of your business is key; defining the steps needed to achieve them follows closely from that.

When articulating these stages in your business development, the opportunities for investment will become clear. You might explore:

• growing your customer base through marketing
• strengthening your services through training
• increasing your market by investing in property or
• boosting your production with new equipment.

Once the opportunities for investment have been identified, calculating the expected return on that investment will help determine which prospect you then follow up.

Financing Options

Having decided to make a financial investment in your business, the next decision will be how this should be funded. Here, we’re going to outline some of the more common opportunities available.

 Making Savings

To make the most of money already in the business, the first step is often to identify areas where savings can be made, allowing for that money to be invested.

 Reinvestment

Similarly, as your successful business makes profit, this money can be kept in the business and reinvested to develop opportunities for the future.

 Grants

Business growth grants are often available through local governments and growth hubs, Grants Online is one of a few similar sites which brings these opportunities together for you to explore (https://www.grantsonline.org.uk/).

Grants will often be for matched funding, requiring you to invest initially with the amount matched by the supporting organisation. These opportunities are generally offered to aid specific types of business (e.g., startups or charities) or particular projects (e.g., innovation, marketing, or training and development).

 Personal Loans

Where investment opportunities require more money than you have currently available, borrowing may be the next consideration. A personal loan may seem easier to get than a business loan; but is it the right option? You’ll need to consider:

• The terms of the loan, is it restricted to personal use?
• Are you in a position to repay the loan regardless of the business performance, this will be held against your credit score, and you will be personally liable for repayment?
• The amount you need to borrow – personal loans tend to be for smaller sums.

Business Loans

A business loan may be a better solution if your company fulfils the criteria required. Although these can be harder to qualify for and more expensive, business loans often come with business support benefits and will be secured against your company rather than personal assets.

Business loans are often secured through banks but can also be provided by other lenders. When considering any kind of loan, it is important to ensure you understand any restrictions and liabilities as well as the interest rate for repayment.

 Angel Investors

Angel investors are individuals or organisations who provide financing to your business for a stake, sometimes also providing mentoring and support; think Dragons Den.

When looking for, or considering an offer from, such an investor – it’s important to do your due diligence making sure you know who they are and exactly what they’re offering.

 Crowdfunding

An alternative to the single investor is crowdfunding. With crowdfunding platforms, you can show off your business to small (micro) investors who are looking to support new ideas.

Through these platforms, investors offer funding to businesses who will identify what – if anything – the investor can expect to receive for providing this finance. While some organisations simply ask for donations, others will offer goods, services, or opportunities to win in return for investments of specified amounts.

What are your next steps?

While it’s impossible to write an article specifying the right approach for your business, this guide should help you create a practical plan by doing your research and talking to people you trust.

Finding the people to support your growing business is where we at Your Business Matters can help; for example, the guidance of accountant Rebecca Taylor of Parfitt Taylor was invaluable to me in writing this blog. When you’re looking for expert advice we can help.

Come and visit one of our groups to see how it feels to be part of our team. In our rooms you’ll meet experts in all areas looking to build relationships with successful businesses like yours, you’ll also experience our Added Value section where we share our expertise, learning from each other.

We have online groups or in-person meetings so you can choose what’s right for you. Find out more about our networking here, I hope we’ll meet you soon.