7 Steps to Raise Capital for an Existing Business

Written By Steps To Faculty Published August 23rd, 2010

When a business is already established but needs funds in order to grow, it is often necessary to seek out ways to raise capital from outside sources. Many businesses need funding beyond what their current cash flow can support in order to make large purchases such as bigger facilities, stockpiles of inventory, or to hire increased staff. When looking for ways to raise capital for an existing business, there are more options than businesses in the start up phase because there is a proven track record of profitability and money management. The following 7 ways to raise capital for an existing business should help provide some ideas for where to begin.

Step 1 Sell existing assets

Many existing businesses have assets they no longer need or use, or that could better serve the company as a sellable asset. This includes equipment, real estate, patents, and copyrights. Depending on the value of the asset and the capital needed, it is possible to raise significant cash from the sale of certain assets.

Step 2 Lease intellectual property and other assets

If selling assets is not an option, leasing assets can often prove very profitable. For example, licensing proprietary software applications for use in other industries can provide additional cash flow. Likewise, leasing extra real estate or facility space can also reduce expenses and raise the needed capital.

Step 3 Take out a loan

Borrowing money from a bank or other financial institution is the most common way existing businesses raise capital for expansion or improvements.

Step 4 Apply for a grant

Depending on the type of business, there are numerous public and private grants for existing businesses to help raise capital.

Step 5 Take on a partner

Brining in a partner, whether an individual or another business, can help raise capital for specific projects or overall growth. Finding the right partner or joint venture business alliance should balance capital investment against the feasibility of a good, mutually beneficial relationship.

Step 6 Seek out private or angel investors

Private investors, also known as angel investors, are another way of raising capital for an existing business. However, great care should be taken when making promises or presenting potential profit projections with investors. Most investors want a reasonable expectation of returns on their investment, but overstating that return can lead to later legal problems.

Step 7 Consider going public with the company

Many existing businesses opt to sell shares in the business publicly in order to raise large sums of capital.
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Roger Due

Investing in Your Destiny® & Coaching Program - Wealth Building Summit Dallas, Texas

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