How to Plan and Afford Business Expansion People assume they will have to pump money into their start-up business, but what they don’t always know is that to continue to keep their business strong and thriving, they also need to continue investing in their growth and internal development. The question, then, becomes how to afford keeping their growing business from becoming stagnant. Here are a few strategies and financial options for managing business expansion without sinking the ship.


First, you must decide what it is that you are looking to invest in. Do you want to update a software system? Open a new business location? Remodel your existing one? Add a product line, or develop a new product? Expand your marketing outreach? Decide where your focus lies, and then you can strategize how much you’ll need to invest. You may not be able to tackle all of your goals at once, but choosing one or two specific paths will help you to be intentional when it comes to your money and other resources.

Plan a Timeline

Think ahead. Outline where you want your business to be in increments of time, short term and long term—based on your five-year business plan. If don’t have a five-year plan, make one.

Within a month of your investment, where do you see your business? What changes do you anticipate? How about after 3 months? 6 months? A year? Be reasonable in your expectations, and give yourself a clear, specific idea of the changes you expect (and hope) to see over time.

Find the Finances

There are a few financial options available to you and your business, depending upon your financial strategy and credit.

Secured Business Loans—These loans require both good credit and collateral. Collateral can come in the form of your company inventory, cash savings or deposits, and the value of your equipment. If you default on the loan, however, you will lose that collateral, so be extra cautious with the amount you can afford to pay off. These are subject to a federal law that caps the amount that lenders can charge in interest rates, so they are a fairly safe option, even if they take more time to deliver funds than other financial avenues.

Merchant Cash Advances—These loans are unsecured, meaning they don’t require collateral or credit scores from you. Instead, Merchant Cash Advances are given to businesses based upon the strength of your business. As such, businesses must show strong earning potential, and are already profitable and established. Instead of a traditional loan payment system, lenders give you money in exchange for a certain percentage of your daily credit card sales until the loan is repaid. These are a great way to get a lot of money fast, and your repayment amounts fluctuate depending upon how well your business is doing.

Business Cash Advance—Similar to Merchant Cash Advances, these are based on the strength of a business. The difference is that the funds are repaid daily through your bank instead of via your credit card merchant.

Before you borrow, be sure to decide upon the amount you will need, and the amount you can afford to pay back. If you do it right, the paybacks from self-investment should far exceed the loan cost.

Jim Rutherford is an avid reader of Forbes and fishing blogs when he’s not working his day job as a writer for VMC Capital