Is your business ready for growth capital?
For certain businesses, growth capital is the ideal type of funding to take them to the next level. So how do you know if it’s right for your business? A few indicators that a business is suitable for growth capital include:
- A stable financial position – Businesses that have had a consistent cashflow and are at break-even or profitable are good candidates for growth capital investment.
- A track record of growth – If you can demonstrate consistent growth since inception of your business, growth capital investors are likely to identify you as a high-potential company.
- A unique value proposition – Investors look for businesses that can demonstrate a clear competitive advantage over their competitors or businesses with solutions addressing clear gaps in their chosen markets.
- A solid plan for future growth – Equally important for businesses looking to secure growth capital is a coherent roadmap for growth, backed up by robust financial forecasts.
Timing is also an important factor. The best time to reach out for investment is well before it is strictly ‘necessary’ to raise funds. Growth capital investors don’t offer ‘rescue capital’ and are less likely to invest in a business that is experiencing cash flow distress. Business owners should be proactively thinking about their capital needs, particularly while you have the time and headspace to make considered decisions in the best interests of your business.