In their song, “If I Had $1,000,000,” the Barenaked Ladies sing about all the options they'd have if they suddenly came into a large sum of money. According to the song, they'd buy a new house, a car and a fur coat (but not a real one, because that would be cruel).
After recently hearing the song on the radio, I wondered, “What would business owners do if they had similar good fortune?” What would a million dollars in your business checking account mean to your company?
The Things You Could Do
Is money the only thing separating you from achieving your goals and taking your company to the next level? With an influx of cash, you could hire more salespeople, invest in new technology to make your company more efficient, and create marketing programs that would increase brand awareness and build lead generation for your business.
One way to achieve these growth objectives is to reinvest your profits back into your business. As part of your short- and long-term goals, you should develop specific plans for reinvesting the money you make into your company.
Most people are familiar with the expression “The only way to make money is to spend money.” I would add one word to the end of this quote: wisely. That's because you won’t make any money in your business with foolish, uneducated investments. So think carefully before you use that hard-earned cash to upgrade equipment or increase your advertising budget or hire more employees you may not really need.
Money is a finite resource for business owners. When companies start to run low on cash, the owners typically end up selling valuable assets to keep their business afloat. Instead, they should have been paying close attention to their company's cash flow—the money coming into your business and the money going out. By keeping an eagle eye on your business's finances, you might be able to avoid selling off assets you'll need down the road.
Getting Your Hands on the Money
Other than hitting the lottery or inheriting a bundle from your rich Uncle Joe, here are five common approaches business owners can take to get $1 million to help grow their businesses:
1. Private equity. Owners of growing entrepreneurial companies typically look to private equity markets (venture capitalists or angel investors) to sell part of their company in return for growth capital. If you're thinking about this route, you should know that venture capitalists are much more likely to invest $1 million into a company; angel investors are likely to provide $100,000 or less.
2. Debt financing. Although the Great Recession put the brakes on most debt financing deals of $1 million or more in the small-business space, there's still hope. If your business has excellent credit plus assets for collateral purposes, debt financing can still be one of your options.
3. Customer financing. Presell your product or service to a large client or customer by offering a discount in return for payment upfront. Ariba Network offers a product called The Dynamic Professional that brings together buyers and sellers interested in an early payment program in return for a discounted price. This option offers companies with cash flow issues an excellent opportunity to get the money they need to grow their businesses.
4. Increased sales. To expand your reach and ramp up sales, you can enter new markets, hire more salespeople or launch a new product or service to generate the money you're looking for. Just remember, all these options require an investment and risk, and markets today are littered with potholes, pitfalls and bad investment opportunities. Do your homework, and be smart about the paths you choose.
5. Learn from others. One of the best ways you can learn to generate $1 million for your company is by talking to people who have already created multimillion-dollar brands. How did their achieve their success? What obstacles did they overcome? A successful entrepreneur once told me, “A smart person learns from his or her own mistakes; a wise person learns from the mistakes of others.”
Whatever path you choose on your way to million-dollar success, make sure you take the time to do things right.
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