How to Protect Your Equity When Your Business Is Thirsty for Cash

When it comes to financing the growth of your business, you may find yourself facing a difficult choice between the lesser of two evils. Selling shares in your business can provide an immediate cash injection, but it means giving up some of your valuable equity stake. Borrowing money from a bank, on the other hand, can be costly to repay, can limit your growth, and often requires that you provide a personal guarantee.

However, there is a third option: customer financing. This approach involves convincing your customers to prepay for some or all your product or service, providing you with the necessary working capital to drive growth.

This method can be a great alternative to selling equity or taking on bank debt and gives you access to cash without having to sacrifice ownership or pay interest.

Productize your Service. Productizing your services or asking customers to prepay can be effective ways to obtain the cash your business needs to grow while keeping a tight grip on your equity and avoiding the obligations of a hefty bank loan.

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Franne McNeal, MBA Significant Business Results, LLC Significant GPS Small Business Growth Services