Expanding an established small business when economic times are tough can be difficult, but it can also be highly advantageous if done correctly. The trick to doing it successfully is securing adequate capital. If banks are reluctant to lend, investment finance can be a practical solution.

Filling a niche

When the economy is struggling, the rate of business failures goes up. This creates new niches for healthy businesses to expand into. At the same time, market demand continues to evolve and developing technologies create new business possibilities, but only a few businesses are able to keep up. Those that do so successfully, without overstretching themselves, have the potential to become the success stories of the future. For this reason, times of low overall economic growth are actually the ideal time to expand, provided that sufficient capital is available.

Securing an investor

Successful business people understand the advantage of expansion at such times and often take the opportunity to make lucrative investments. This means that there is always a reservoir of investment capital available for those with pitches impressive enough to attract it. A key component of this is a solid business model, even if it is not making big profits in its present form, and a team that is genuinely committed to making it a success. Attracting an investor is not just about having a good idea. It is also about demonstrating the passion required to see it through development and maximise its potential once an investment has been made.

Trading equity

Despite the rhetoric of financial independence that pervades small business culture, cooperative strategies can be just as important as competitive ones. There is nothing inherently bad about parting with some shares as long as the deal is a good one. Access to investment capital in the immediate term can mean a stronger, bigger business in the long term, so remaining shares might eventually be worth more than the total value of the original business.

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