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How to raise capital for a business expansion?

Published on 18th December 2018 - Last update on 29th December 2018

Are you itching to take your business to the next level? Although it’s tempting to charge full steam ahead regardless, moving forward before you’re ready can be a big risk. Whilst deciding to expand can be exciting, you need to make sure that you can actually support growth in the first place. Yet, when it comes to supporting your business’ development, one resource that you simply can’t afford to neglect is capital. After all, driving any business project forward without it would be a struggle. But this challenge can be difficult to overcome so how can you raise enough capital for a business expansion?

Are you ready to expand your business?

Before doing anything, you need to make sure that expansion is something that your business can support and benefit from at the present time. As such, it’s vital that you look at your existing business model and assess its current condition objectively. After all, just because you’ve been successful in one location doesn’t necessarily mean that you’ll get the same result next time around. Success in this regard comes down to planning, preparation and research. If you don’t understand the market, opening up a new branch without having done prior research into the area’s demographic could be a major financial risk, especially if the reception falls below your expectations.

Besides, deciding to expand into another location also throws up another important question - can your existing premises cope with you having to divide your time elsewhere? If you’re still assuming managerial responsibilities and aren’t able to assign them to anyone else, this could result in low productivity, a lack of coordination and the potential for costly mistakes occurring in your absence.

Thinking about expanding your business into another market? Need access to additional capital? Apply for Growth Finance or learn more about how your business could benefit.

Are you aware of the costs involved?

With any expansion, you must ensure that you’re fully aware of all the costs involved and how much strain your finances can take at present. This means that, before going ahead, you need to carry an in-depth analysis which takes into account each of the costs you can expect to be confronted with. After all, establishing another branch essentially means double the expense in every regard, depending on how many branches you’re opening. So as well as the costs associated with purchasing property or leasing commercial space, you’ll also need to look into aspects such as:

  • The cost of hiring and employing additional staff
  • The cost of acquiring additional stock/supplies
  • Insurance premiums
  • Tax liabilities
  • Utility bills
  • Opening day marketing
  • How long you can expect to have to support the branch until it becomes sustainable.

Of course, this can be a lot to get your head around but, having launched your first premises in much the same way, you can use your experience and past balance sheets to accurately predict how much capital is required. Just remember that deciding to open a new branch can throw up its own set of unique challenges as well, so being well prepared and aware of any arising situations is essential if you’re adamant about expanding your businesses into new markets.

Have you checked your Personal and Commercial Credit Profiles?

Next, you need to check your Personal and Commercial Credit Scores, especially if you’re thinking about applying for business finance to get the ball rolling. Beside, periodically checking your credit profiles is a vital responsibility of every UK business owner. This can be achieved by generating a report using the services of a credit agency such as Equifax, Experian or TransUnion. Upon receiving a report, you need to be aware that lenders and any financial institutions you apply to will assess your creditworthiness to determine whether you qualify and how much interest they’ll charge. As such, they’ll incorporate a number of factors to their checks such as:

  • Past/Outstanding County Court Judgements (CCJs)
  • Arrears
  • Accelerated Payment Notices
  • Outstanding Debts
  • Existing Finance Arrangements
  • And whether you possess a history of resolving debt on time.

If you notice any issues or mistakes, you need to get in contact with the credit agency responsible for the report as soon as possible, especially since even a misspelt address can adversely affect your application. However, you need to do so whilst also being able to provide sufficient proof that a mistake has occurred before any amendments are carried out.

What finance solutions are available to you?

Finally, if you need to access additional capital, it’s time to have a look at what funding opportunities are currently available to you. As you are currently trading, you should have already developed a reliable trading history that clearly represents your potential for further success, which will be invaluable when applying for Business Finance. So, as well as Crowdfunding and Venture Capital Funding, you can choose to explore what the Alternative Finance industry has to offer as well. Providing access to a wide range of Business Finance solutions, the Alternative Finance industry could enable you to apply for Growth Finance and choose from a variety of products such as Secured/Unsecured Business Loans, Commercial Mortgages, Bridging Loans, Invoice Finance, Overdraft Replacement, Inventory Finance, Leasing to Merchant Cash Advance. All you need to do is choose a product that is suitable for your business’ development.

Looking for a way to raise capital for a business expansion?

Deciding to expand your business can be an exciting time for any UK business owner. However, you need to temper your excitement and make certain that you’re fully prepared and have considered every potential pitfall beforehand. This includes making sure that you have access to enough capital to support the scale of your ambitions, with an internal infrastructure that won’t buckle under its own weight. Fortunately, that’s where we can help.

At Rangewell, we’re an Access to Finance specialist working with over 300 lenders to offer you a comprehensive overview of more than 23,000 business finance products. Our services are free to use for business owners and their advisors and we’ll also guide you through the application process. So if you’re hoping to expand your business into a new location but need access to additional capital, apply for Growth Finance today or find out more with Rangewell.


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David Harrison

David Harrison

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