3 ways to invest in your business in 2023

Many businesses require additional investment at one time or another. 

Perhaps your business is one of them. 

It might be that you’re struggling to meet an uptick in customer demand and need a cash injection to invest in more stock. Or perhaps your existing equipment is lacking and you need to get your hands on some new technology in order to compete. 

Investing in your marketing strategy could also help you grow your business into new markets, as well as retain the loyalty of your existing clientele. Even refurbishing a tired shop front could help you cut through the competition and attract new customers. 

Think about the following areas of your business. Do they require additional investment?

• New machinery or equipment

• Employees (hiring new ones and upskilling existing staff)

• Business premises

• Marketing and branding  

You have three main options when it comes to sourcing investment: reinvesting some of your business; own profits, seeking private equity, or taking out business finance. 

1. Reinvesting 

If you’re in a position to be able to do so, you might decide to reduce your income and pump some of your profits back into your business.  

This could be the route to take if you don’t want to have to meet loan repayments and the other costs associated with finance, such as interest. You’ll also be able to sidestep having to give away shares to private investors.

2. Private equity 

When seeking equity from private investors – including corporate entities, venture capitalists and angel investors – you’ll have to create a compelling case for why they should invest in your business. Investors will also want to know that you can successfully take your business to the next level. 

Here are a few things you’ll have to prepare:

• Details of your business’ previous performance

• Cash flow forecasts

• Business turnover

• Your business plan and relevant market research

You can typically use private equity for any business purpose. One of the biggest benefits of private equity is that the amount the investor is willing to lend is up to them, so you could end up raising more than you anticipated. 

Unlike business finance, private investment doesn’t have to be repaid. However, investment does come at a price: shares in your business. 

Giving away shares will affect how much influence you have in the business and investors will have a say in the decision-making. Think carefully about if you’re willing to part with equity, and if so, how much.

3. Business finance

Business investment can also come in the form of business finance, whether it’s a secured term loan that uses one of your assets as security, funding secured against your accounts receivable, or an unsecured finance type such as revolving credit facility.

 Although finance must be repaid, you won’t have to give up shares in your company. 

Regardless of the business finance type, you’ll have to meet the lender’s eligibility criteria. A trading history and good credit score can help, but there are also products out there for businesses with bad credit and those that haven’t been trading for very long. 

Meeting your finance payments is important: not doing so could put your business assets at risk or you may have to repay the loan yourself. Remember that you’ll have to account for interest payments and other expenses, such as set up fees, when working out the overall cost of the finance. 

Here are a few business finance options to explore:

• Asset finance – helps you buy or lease equipment or machinery

• Bridging loans – short-term finance to bridge a gap in funding

• Invoice finance – lets you use your unpaid invoices as security for funding

• Merchant credit advance – where repayments are based on monthly sales

• Revolving credit facilities – lets you withdraw, use, repay, and withdraw again

• Unsecured business loans – no security required (but may require a PG)

• Business credit cards – an additional line of credit for business expenses

Funding Options can match you with the best business finance solutions for your needs. Depending on how much you need (and your business’ circumstances), you could be eligible for funding amounting to anywhere between £1,000 and £20M. 

We’ll guide you through the application process and make sure you get the best deal. Whether you’re looking for short-term finance to ease cash flow issues or a longer term loan to invest in your business, start your funding journey with us today.