Growing Your Business: Financing Vs. Bootstrapping

GROWING YOUR BUSINESS FINANCING VS. BOOTSTRAPPING UK SMES borrowed £29.2 billion in 2014, 9% more than in 2013. With most businesses considering funding at some point in their journey, we look at some of the most popular types of funding, and the pros and cons of financing vs. bootstrapping, when it comes to growing your business. 4 OF THE MOST POPULAR TYPES OF FINANCING: INVESTORS: This is a particularly popular option for businesses that require capital at an early stage. This typically involves an individual investor or investment company buying equity in the business. BANK LOANS: Bank loans are one of the most traditional and ШI long-standing financing methods for a business. However, there are a number of different types of loans available, and the terms of each can differ quite significantly. LEASING AND ASSET FINANCE: This is often suitable for businesses that want to finance equipment. Leasing and asset financing often involves monthly payments over an agreed term and is often good for businesses that want to preserve working capital, as they are not required to purchase the machinery or equipment outright. new machinery or CROWDFUNDING: can apply for finance through a crowdfunding platform. Many crowdfunding projects have thousands of investors. The information about how much money you want to raise and what you require the money for is normally made publicly available so that members of the public can look at your business and your 'pitch', and decide whether they want to invest in it or not. You BOOTSTRAP VS. FINANCE business will likely consider the At some point in option of finance as a way to accelerate growth. One school of thought says that you can bootstrap your way to success, without any external investment, whereas the other school of thought says that external financing is necessary if you want to fake your business to the next level. your you Below we outline the pros and cons of both approaches. PROS OF PROS OF FINANCE: BOOTSTRAPPING: - FASTER GROWTH - YOU OWN ALL OF YOUR - INCREASED OPPORTUNITY BUSINESS - MORE TIME TO SPEND ON - EXPERTISE FROM INVESTORS YOUR BUSINESS - EASIER TO PIVOT AND CONS OF FINANCE: CHANGE DIRECTION - LESS CONTROL OVER YOUR COMPANY AND ITS FUTURE CONS OF BOOTSTRAPPING: - TIME-CONSUMING TO RAISE CAPITAL AND KEEP SLOWER GROWTH AND THE BOARD UPDATED REDUCED OPPORTUNITY - OFTEN DIFFICULT AND - YOU ASSUME ALL OF THE COSTLY TO GET OUT OF RISK AGREEMENTS WITH FINANCIERS - LACK OF RESOURCES PRESENTED BY: COUNTY FINANCE GROUP LIMITED