Are you planning to expand your startup or small business? Do you have enough money to fund your business growth initiatives and scale your operations? Most business owners rely on personal savings or credit cards for additional capital—but that’s a dangerous way to do it. They’re putting their credit scores and personal savings accounts at risk. So if you’re planning to grow your business, learn from their mistakes and explore other ways to fund your expansion.
Here are multiple ways to fund your business growth efficiently:
1. Use upselling & cross-selling.
One way to prepare for expansion is to generate more cash from the business itself. You can do that by boosting your company’s upselling and cross-selling initiatives.
Upselling is all about offering your clients a better or larger service without you spending too much on the upgrade costs. It’s a win-win situation for both sides—your client gets increased value while you generate more cash without spending much. Think of the “upsize your drink” strategy. The cost of offering a medium drink isn’t that far off from a small drink, but you’ll earn more by pushing medium cups all day long.
Like upselling, cross-selling provides better value to clients while increasing your sale. But this time, instead of focusing on “upsizing” the same product, you persuade the customers to get additional products from other categories or product lines. Say you run a clothing shop. Once the customer checks out a pair of trousers, your staff should offer them a belt or a dress shirt to complete their outfit. Do you offer home or office repair services instead? You can also cross-sell by creating packages across service types that deliver more value to the customers while increasing your sale.
2. Create strategies for repeat purchases.
Another way to generate revenues to fund your business growth is to get your customers to buy again. It helps create residual income for your startup, as there are no additional client acquisition costs. So start creating strategies to promote repeat purchases. You could encourage customers to buy again by offering freebies or launching a loyalty program, wherein they can earn points every time they buy. Just make sure that the freebies or loyalty program rewards don’t cost much to you.
Since you’re dealing with happy customers, why don’t you generate client referrals, too? You can attract more potential buyers by cultivating programs that allow your satisfied customers to become your brand ambassadors on and outside social media.
3. Identify money leaks.
While boosting your sales & revenues, you should also identify the money leaks in your organisation. That way, you can take care of your cash flow better. Start by auditing your business’ recurring expenses. Make sure to pay extra attention to costs that have gradually increased over time or have not added value to the business. For instance, check your app subscriptions. You probably had a promotional rate for the first few months of service, but the rate might have increased after that period. Compare the existing rate with similar apps or services, and, perhaps, you could switch to another package or provider to cut costs and get better cash flow.
4. Check under-utilised resources.
Under-utilised resources are another facet to look at when you want to fund your business growth efficiently. Do you have unused physical assets like office equipment or a warehouse? Consider renting the equipment to other companies or subletting the extra storage space to generate more cash for your planned growth initiatives.
If the under-utilised resource is your staff or your time, consider subcontracting for another company. It’s a good opportunity to keep the cash flowing, especially when transitioning processes during the expansion. Just make sure not to overdo it and end up overworking your team, as that might lead to another host of issues.
5. Consider small business loans.
If you need more funding after trying the tips above, consider small business loans. Some lenders offer secured business loans, allowing you to borrow money as long as you have collateral. If you need the funding right away, try unsecured business loans. You can also apply for overdrafts or lines of credit for purchasing equipment overseas or funding an office fit-out. Be sure to find a reputable lender and compare your options before applying for one. And don’t forget about the fine print! Read the terms and make sure you’re good with all of those before signing the document.