Tips For Financing Business Growth In 2022

With businesses struggling amid rising inflation, supply chain crunches, interest rate rises, and labour shortages, growth seems like a lofty goal for 2022.

However, business growth can be achieved – some of the world’s biggest companies such as Activision, Seagate, and Virgin Books, an outgrowth of the Virgin Group, started amid 10%+ inflation during the end of the 1970s.

Here are some tips for financing business growth in 2022, even when it seems like a tough hill to climb.

What’s your growth plan?

Though your business may have ideas for growth, what is your plan? You need to create a plan that’s SMART – Specific, Measurable, Achievable, and Time-Limited. That could mean beginning with a vision statement – “20% greater market cap within the next three years.” This contains every attribute of a SMART goal. 

The next step is formulating a strategy and tactics underneath – does the business need more room to operate? Expanding manufacturing? Additional workforce? Vertical integration? What does that look like? Sinking short term liabilities into long-term assets is usually a recipe for disaster. The funding for an asset must match the timeframe of the liability, e.g. a five-year loan for financing a car. 

Finance that optimises growth

Taking on asset finance – especially for real estate – is a sure-fire investment in business growth. After all, investing in land is a great asset as humourist Mark Twain said, “Buy land, they’re not making it anymore.”

Your business may not have to buy land – though it may be a strategy to cut costs and funnel your operations into one that’s more vertically integrated – but growth-oriented assets that not only perform (i.e., are responsible for making profits) but also appreciate in value. 

These are all examples of secured finance – finance that requires a security or collateral for approval. This is usually the asset being purchased, though some lenders may insist on other collateral to be staked instead. There are some non-traditional ways to obtain finance, as we’ve outlined here.

What if your business is lean, agile, or most of its holdings are intellectual property? Even if your business isn’t any of those, you can still fund business growth with unsecured business loans.

Cash flow management

One of the biggest reasons why businesses fail is that they lack proper cash flow management. Taking advantage of unsecured business loans can spur on business growth opportunities – buying inventory, freeing up capital, paying for leases or hiring equipment for specialist contracts, etc. In most cases, unsecured business finance can be accessed within a day – or sometimes a couple of hours.

Unsecured business loans don’t require collateral and can be used for any business purpose. Most unsecured business loans allow you to pay off the balance early – handy if you find your business experiencing rapid growth – which is the aim.

Disclaimer: Always ask your accountant or financial controller for advice before taking out business credit.

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