Building a business is a group effort. Not only do businesses need funds to drive growth, they also need capital to fund their ongoing operations. Many come up with the necessary working capital by taking out business loans, but this often isn’t enough. Depending on your business’ size and financial health, loans might simply not be an option. The other traditional option, of course, is to turn to investors, who can provide financing in exchange for equity.
All posts by Will Roffe
To compete and drive growth in a competitive environment, businesses need to access all the funding they can get their hands on. The more working capital a business can come up with, the better it can secure top quality talent, develop and produce competitive products, and market those products to accelerate its growth. Traditionally, businesses rely on bank loans and investment to provide the capital they need. More savvy businesses, however, additionally take advantage of off-balance sheet financing to complement these tools.
Businesses often scout for talent, and hire candidates, based on a simple principle. The more technically qualified a candidate is for a role, and the better they fit into the company’s existing culture, the better. In the short term, this makes perfect sense. New hires who can culturally integrate into the team and their new roles with minimal effort can become productive more quickly than less qualified candidates could. In the longer term, though, businesses are forced to deal with a cost that comes with this strategy. By pursuing the path of least resistance with regard to integrating new hires, businesses sacrifice diversity.
Getting involved in politics can have unpredictable positive or negative results, which is why most brands actively avoid taking a firm stance on major social and political issues. After decades of slow social progress, however, businesses are turning out to support, and to potentially capitalise on, gay pride and the broader LGBTQ rights movement. Gay pride events attract millions of people to major cities all over the world, and the potential boost to businesses who can cater to the community is very significant.
When businesses go looking for financing, they rarely do so with a great deal of time on their hands. Whether they’re hoping to seize a growth opportunity, or dealing with an unexpected cash flow problem, time is nearly always of the essence. Depending on the urgency and the nature of their particular situation, this often forces businesses to accept unfavourable interest rates. Worse, some businesses will simply apply for business loans with many institutions at the same time, hoping to qualify for a good rate with one of them. While that might work once, it can wreak havoc on the business’ credit profile.
The cost of renewable energy, particularly solar power, has dropped dramatically in the past two decades, to the point where 80 percent of new solar projects in 2019 are projected to outcompete even the cheapest oil, natural gas, and coal projects. The average cost of installing new solar panels in 2019 is just over $3 USD/watt, down from $12/watt 20 years before.
It’s difficult for businesses to determine how much to invest in their own growth, and how aggressively to pursue opportunities that present themselves. Driving innovation and product development, hiring and training new workers, expanding facilities, and other costs of growth ultimately draw on working capital that is needed elsewhere.
The construction industry can be lucrative, but it comes with its own share of risks that businesses need to manage if they want to succeed. The amount of time that passes between breaking ground on a home or building, and collecting revenues from the sale of that home are often very long. Meanwhile workers and subcontractors need to be paid, and those subcontractors need to make their own purchases in order for projects to progress. The resulting financial pressures can make it difficult for both large builders, and their smaller subcontractors to operate efficiently.
On June 18, Facebook announced that it is forming a new subsidiary by the name of Calibra, that will begin issuing its own digital currency starting in 2020. While this might look like just another blockchain currency at first glance, it comes with legitimacy, accessibility, financial backing, and centralised control that most lack. For businesses, it may represent an important opportunity.
Export businesses bridge the gap between manufacturers or resource extractors, and the global economy. Unfortunately, trading goods internationally is time consuming, bureaucratically challenging, and of course, expensive. Businesses need to invest significant funds in acquiring goods, repackaging them for export, and getting them where they need to go.