Tips For Funding Your Small Tech Business' Next Growth Phase

If you’re scratching your head wondering how to grow your business, you aren’t alone. Many tech companies struggle to plan for growth, struggling to get through the work they’re doing already! So how can you get funding for your small tech business’ next growth phase? We have some tips to help you thrive in the next chapter of your business.

Investing in better technology

You’re a tech company already — but are you leveraging the latest tech to achieve growth? Are you a small business wasting time (and money) farming out administrative tasks that could be done with CRMs and automation? One person plus another person rarely equals double the productivity. Do a company-wide assessment to see what tasks can be automated so you can concentrate on your core offering — and spend time improving business relationships.

Look at business loans

Funding from external sources is critical to success — and loans are a relatively low risk option to gain enough capital to propel you to your next growth phase. Doing due diligence is crucial here, so you should compare interest rates on business loans before approaching any prospective lenders. Remember that long-term loans should be spent on long-term assets. Spending long-term liabilities on short-term assets such as inventory or single-use items can often get your business cash flow tied up unnecessarily. Cash flow is the lifeblood of any business; being short on cash flow can really hamper your ability to achieve real growth.

Invoice financing and lines of credit

Other types of financing can also free up cash flow and help your business achieve growth. Two options are lines of credit and invoice factoring or invoice financing. Lines of credit are revolving loans that might help with seasonal cash flow or short-term needs. If you borrow $50,000, you’ll pay interest on that amount at the end of the month. Annual and transaction costs are determined on what you borrow.

Invoice factoring is a type of financing in which a lender pays a portion of your accounts receivable invoice immediately, with the remainder coming when your debtor has paid the invoice in full, minus account fees and the “factoring” fee, which is a percentage of the rest of the invoice, calculated per week or month. Don’t become reliant on these methods, as it can be affected by the law of “diminishing returns.”

Pivoting to emerging technologies

New technologies such as AR (augmented reality) or artificial intelligence may be a boon to your business, giving it a renewed perspective and a leg up over the competition. Although you may not be a new start-up, you can always move into emerging technologies while keeping your core tech business. If you need help with new technologies, the government is offering grants and consulting to help tech companies move into exciting new tech futures. With that in mind, who knows where your company might go?

Image credit: iStockphoto.com/Olivier Le Moal