As many of you know, a few years ago, I had co-founded an Auto-CAD outsourcing business. Â I provided some of the initial funding for things like web design, initial advertising, initial hires, computers in the Philippines, etc. Â However, we were treading water for a while and not really growing. Â That’s where some funding infusion came in. Â We happened to have an old college buddy that pitched in tens of thousands of dollars to really blow out the opportunities. Â This allowed the other founder to quit his job and go full-time to really manage large clients and give the business an air of professionalism and legitimacy. Â It’s really hard to convince large corporate clients that you’re serious if it’s a gig you’re only running on the side at night and on weekends. Â So, this made all the difference and helped turn the business into what it is today – a Million Dollar revenue company.
Business Line of Credit
The reality is, most folks don’t have a benevolent uncle or friend who’s willing to put that kind of money at risk for an unproven business where the return on investment may be years off. Â However, there are options. Â Getting a business line of credit can allow a typical business owner to quickly secure the funding they need to increase scale and invest for the future. Â Every case is different and interest rates would typically be commensurate with the risk, but if it will allow you take your business to the next level, why not take a look? Â The worst that happens is you decide the terms don’t work for you.
How Businesses Grow
True, many businesses grow organically and start from a small base. Â But they often grow much more slowly than they would have if you started with scale from the early stages. Â As a business owner who may be on a single income and only so many years left to work, do you really want to wait decades to realize the potential your business possesses? Â Oh, and I forgot to mention, in the case of my AutoCAD outsourcing business, in order to secure that substantial funding from our friend, we also gave up a large chunk of equity in the company to do so. Â That was the tradeoff. Â In the case of a business line of credit, the creditors are looking for interest rates to compensate their risk, not necessarily a stake in your company. Â So, when all is said and done – if and when your company is successful, you still own the equity.
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