For most businesses, being able to reach strategic goals means having to undertake growth. This required growth can come in many forms.

If you have decided the time is right to grow your business, you may be focused on one type of growth or, depending on what you are aiming to achieve, a variety of plans that will work together to help you reach your goals. Regardless of what business areas you are growing, having financial support in place is essential to help you get there faster and more efficiently.

In this blog, we are detailing the main types of business growth you may want to implement in your enterprise and the funding options to help you get there.

• Growth of products and services
• Operational growth – staff and equipment
• Addition of new business premises
• Internal growth

Growth of products and services

One way to grow your business is to offer additional products or services to your customer base. By doing so, you can add value to your existing customers by fulfilling their needs or filling gaps in the market.

If you are adding a new product or service to your business offering, the likelihood is you will need the resource to do so. For example, if you are creating a new product to sell, you will need the materials to produce it. You can utilise trade and stock finance to fund this.

Trade finance is when a lender pays your overseas suppliers based on existing orders you have in the UK. So, if a customer has an order for your products, you can get the imported supplies you need without having to pay for them upfront. You then have more time to pay back the lender once you have received customer payment. This type of finance is great for maintaining a healthy cash flow through expansion.

With stock finance, you receive a loan with the stock sitting in your warehouse used as collateral. By doing so, you can release working capital into your business while still having access to the materials you need to produce your products. This allows you to create new items without having to place a financial strain on your business.

Equity investment, such as angel investment, may also assist by giving you funding to create new product lines or services. With these options, wealthy individuals or groups of individuals with expertise in business (and perhaps specifically in your sector) put their money into your company in exchange for shares. By doing this, you can get sizeable funds for your business that can be used towards your growth strategy. This is particularly apt if you can prove the new product/service will offer value to your customers or increase demand, so investors can be confident they will get a good return on their investment.

Finally, grants may be a viable route depending on what product or service you are adding to your business. Industry, local and government grants can provide free funding if your business meets the right criteria. It is worth spending time researching these grants to determine if your new products or services make you eligible.

Operational growth – staff and equipment

If your business grows, such as having increased demand from customers or adding a new product to your roster, it usually means you will need to expand your operations to meet the new demand. This can include hiring more staff, investing in more equipment or spending more on supplies.

There are a few ways you can fund operational growth. Taking out a business loan is a traditional way to do so and will allow you to get a lump sum of money to invest in new staff and equipment. You can then make regular repayments as your demand grows.

Boosting cashflow is also a great way to grow your operations by allowing you to free up funds to utilise towards staff wages and additional supplies. There are many ways to improve cashflow, and one of these is invoice finance.

With invoice finance, a lender will give you up to 90% of the money owed you through your outstanding invoices. If you find cash is often tied up due to outstanding customer payments, this could be a beneficial solution as it allows you to extend your payment terms and spend the money elsewhere instead of waiting.

If you need to invest in new equipment as part of your operational growth, leasing and hire purchase can enable you to get the assets you need without having to pay for it in its entirety. With these options, you obtain high-value equipment and machinery in exchange for paying regular instalments. With hire purchase, you will own the equipment once you have paid the balance. With leasing, it is not unusual for either a peppercorn rent to be paid at the end of the lease period or for a small one of payment to be made and then ownership reverts to you. This means you obtain the assets you need to expand your operations while still being able to maintain good cashflow.

Addition of new business premises

Another way a business may grow is to acquire additional premises; relevant to businesses that have factories, shops and offices. This allows you to target a wider audience and new communities. Having other sites is an excellent indicator of success, particularly if your goals are centred around having a chain of stores or becoming a national or global company.

Investment may help you on the road to acquiring new premises, particularly if you can get substantial funding. However, the most common finance for this would be a commercial or business mortgage.

Commercial mortgages can help you purchase new properties to be used for your operations in exchange for regular repayments to a lender, much like a standard mortgage. When seeking a mortgage, it is vital to do your research to find the right mortgage for you. It is absolutely essential to ensure you can keep up with the repayments and get the space you need. Typically a deposit of between 25-35% is required.

Another way to add new premises to your business portfolio is through the acquisition of other companies. Acquisition finance options include investment and bank loans, which aim to enable you to buy out relevant enterprises which can then be incorporated into your own operations. This is a great way to build your business by allowing you to increase your market share, diversify your offering and take control of additional assets from the acquired enterprise, including any buildings they may own. There are a plethora of asset-based lending options for business acquisitions.

Internal growth

Internal growth is focused on making your internal processes better so you can benefit from effective operations and increased productivity. Again, cashflow management can play a role here by allowing you to fund your operational tasks efficiently and pay your suppliers on time.

If you are looking to transform your operations using new processes or innovation, R&D tax credits may help you to fund this. These tax credits are part of a government reward scheme to encourage businesses to utilise innovation in their products and processes. The tax relief provided by these credits can give up to 33p per every £1 spent on your activity related to research and development. This means you can evolve your operations for improved efficiency at a reduced cost to your business. Similarly, you may also be able to find innovation-based loans to fund internal improvements.

Get advice

Growing your business –  whether it be operationally, internally or adding products or services to your remit – is a great step for any owner to take when moving towards their intended goals. However, having the right funding in place is the key to making growth a reality.

If you need advice on how to grow your business, we can help. Our team of advisors have expertise across a range of industries and business types, including in helping them to expand, so we can provide the right guidance.

Please call the team today for a free consultation or email [email protected].