10 Strategies to Grow Your Business Without Borrowing

April 12, 2013 | By | Reply More

As you grow your business, one of the important challenges you will face is the need for additional capital. Your business may need the infusion of new cash to be able to expand and reach the next level. Or, you may need additional money just to survive.

However, getting new money may not be that easy. In fact, the search for capital can be frustrating. Banks may turn down your request for business loans for a thousand and one reasons. You may not have enough assets that you could use as collateral. Your company may not be in business long enough to establish a satisfactory credit rating.

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If you have a viable business, good customers, and a business plan, there are options to get the funds to grow and succeed. You can grow a company without borrowing (or with minimum borrowing) through a number of ways

Here are 10 ways a small business can grow your business without incurring too much debt:

1. Examine your cash flow.

If you are looking unearthed cash to expand, the first step is to check your cash flow. Before you realize it, your receivables from slow-paying customers may suffice to fund a new project or expansion of your business. Too much receivables can cripple, if not kill, a business. After all, you have already expended capital for labor, supplies, time, expertise, etc. for products delivered or services rendered, while the customers are taking their sweet time paying you. Tighten your payment policy and demand deposits or cash upfront. As an incentive for quick payment, offer discounts. Keep up with billing; track accounts that are past due, and diligently pursue payment after 30 days.

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2. Expand through profits.

As your company grow, allocate profits primarily for products and services that have proven to be profitable. When a particular line of products succeed, expand sales in that line rather than expanding with other lines. Consequently, operations and marketing will be more cost-effective, maximizing your company’s profits.

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3. Accelerate income.

You can increase your income in a number of ways. First, you can raise your prices or increase fees; but do it in a way that you do not lose customers. You can also explore adding complementary products or services that would fit naturally into your present product mix. The key is to broaden the scope of the business without incurring disproportionate expenses.

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4. Decelerate cash flow.

You may also want to preserve your capital by decelerating your cash flow. You can hang-on to your cash flow through a number of ways. You can delay payments to vendors: instead of paying immediately upon receipt of the bill, postpone payment to the extent possible. You can even try to push the envelope further by negotiating a 45 days payment cycle, or further if possible. Review your terms with regular vendors and try to negotiate a more beneficial term for you.

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5. Form a strategic marketing alliance.

A marketing alliance is a joint effort between your business and other companies to mutually build awareness of the benefits of your respective business products and/or services. In this fashion, you are able to gain increased access to multiple services and even exchange customer bases. By partnering with another business, your market suddenly expands without spending a fortune on marketing and advertising, as you are able to market to your partner’s customer base. Income also increases as you earn a royalty or share revenue from the other business’ (your alliance partner’s) sale of its products and services to your customers.

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6. Form a strategic product alliance.

Entering into a product alliance with another business allows you to offer your partner’s products and services to your existing customers, while your alliance partner sells your business’s products and services to its customers. As a result, you are able to expand your product line without any of the costs associated with it – particularly manufacturing, product distribution, investments in inventory, etc. You can even arrange to have your partner drop ship their items that you’ve sold, thus saving you after-sale expenses and time. Remember, however, that a strategic alliance must be win-win in order to be sustainable and mutually beneficial.

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7. Explore non-debt financial solutions.

You can seek non-debt solutions to grow your business. Some of these include accounts receivable funding/factoring, purchase order funding and equipment leasing or leaseback. A factor buys your company’s accounts receivable and fronts you cash — anywhere between 50 percent and 80 percent of the value of your invoices; then collects your accounts receivable and gives you the remainder owed, less a fee. If you are a retail merchant, you can explore funding sources that will provide a cash advance for future credit card purchases.

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8. Branch out to related products and services.

If you want to expand your product line or services, you can save on the costs of marketing by choosing those that are related to your existing field. This strategy will allow you to save on precious dollars on marketing and operations. For example: if you are selling upscale clothes for baby boys, you can add choose to add a new line of baby boy’s shoes and market them to your same customers. If you expand by adding a line of baby girls’ clothing, you would need to tap into an entirely different market and spend tons of financial resources and time marketing to this new segment.

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9. Streamline operations.

Take stock of your non-income producing activities (e.g. internal operations such as inventory management and bookkeeping). Make sure that these activities are able to keep pace with the growth of your business. They may not directly contribute to your profitability, but productivity in these areas can spell a difference in your bottom line.

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10. Work with financial and business advisers.

Seek the guidance and expertise of financial and business advisers as you grow your business. Without resorting to borrowing, ask them to help you map out strategies to help increase profits, streamline internal operations, increase the effectiveness of your marketing and guide your business as it expands.

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Recommended Books on Growing Your Business:


George Rodriguez

George Rodriguez is a writer for PowerHomeBiz.com. An entrepreneur with experience in running several businesses, he writes on various topics on entrepreneurship and small business.

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Category: Business Growth

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