Investing for Growth Wow, this may make you think, money is money, does it matter where I get the money? However, you need to realize that out there, “there are some investment capital may help you succeed and some may be the kiss of death”, said the authors. Not all money is alike. You need to shop for money like you shop for a car. Check out all the banks.
Money for new growth ventures is different than for an established business. With an established business you can always consider selling stock if your set up to do so. Will it be a bank you look for? Possibly an investor and if so will you offer an interest rate for a return or a percentage ownership of the business? Silent partner or working partner? Does the business have a tangible product or more a service or high tech idea? So many factors to consider.
Is the money going to sustain your company or inventory? Is it expected to grow the company? If so you need to grow it the best you can keeping in mind what your goals are and not to run short on capital while trying to grow. Also, if you get a large order in because of an instant success will you have someplace to go to fill the ticket and fulfill your order in a timely manner. If not, you will risk losing this or future orders if the buyer does not see that you are efficient.
Money can also be gotten from public money, private capital, friends and family. If the money is for a new venture it will be a slow growth. If there is a product with quick growth, then there is a quick profit and usually management will accept putting out a better return for this quick money to quick profit scenario.
If it is stock you are dealing with and you need to value to increase then a CEO will often elaborate or even exaggerate on the success of the business. This brings the stock value up and allows for more funds to work with but now the company must work on closing the gap between realism and what values then creates. If a CEO is not willing to do this then an enterprising manager might.
The Innovator’s Solution: Creating and Sustaining Successful Growth – by Christensen, Clayton M. and Michael E. Raynor, 2003