For the entirety of your organization’s growth, capital and ready access to it has been essential. It doesn’t matter if you started in a garage, had immediate investors or were funded solely by a family member – cash is key to growth.
Likely as your Middle Market company grew from humble startup to profitable organization, it has utilized various forms of financing. Continuing to grow through and beyond Middle Market size might mean accessing yet another set of funding options.
Deciding where to seek funds from does change as you grow, mainly because what is available and appropriate shifts with company size and profits.
Education Is Key
At every stage of your growth, your C-Suite should be aware of available financing options and understand the key points of each. It’s vital your Middle Market organization develops and implements processes for evaluating your financing needs and options.
To begin with, look at traditional financing routes – profits, investors, partners, lenders, etc. and define what is currently available and what can exist in the future. Be sure to include dependencies or factors that will define what you’ll have access to. Working with your lenders, board of directors and/or advisors and key mentors should give you a pretty good idea.
Next, look at alternatives available. While you don’t need to have an exact, step-by-step plan for these resources, knowing about them and how they could come into play will make it easier to quickly adapt and adopt in the future.
The Right Path For Your Middle Market Organization
Education about financing options is a great first step. Once you’ve laid out what is available and know what you need now and in the future, you can decide what the right steps will be for seeking funding.
What’s most important to your firm regarding funding? Deciding and sticking to that ideal should be a high priority. If you’ve done your homework, you know what options exist and what is required or where you have dependencies built in that allow or preclude certain financing opportunities.
Putting it all together should help you develop a shortlist of financing options and show your internal temperature regarding traditional and alternative financing.
When Alternative Financing Might Make More Sense
What you’ve found during your education and decision-making processes, should show an affinity for alternative or traditional financing methods. Knowing this is important. When traditional financing is a more difficult path, alternative financing methods may still not be the right choice, ultimately. Having a clear idea of what you want to achieve as you grow and how that ties into your company’s ideals and culture is key in the decision-making process.
When would traditional financing options be less appealing in general?
By staying abreast of financing alternatives and understanding how they fit into your Middle Market firm’s goals, you’ll be able to plan for and achieve your goals now and in the future.
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