The perfect business opportunity doesn’t come by often. You want to be in the proper position financially to fund the business acquisition when it does. Any seasoned business person will tell you that you don’t have to get ready if you stay ready.
A businessperson who stays in the ready position seizes the moment and is always prepared to access equity financing. To get to this stage in business, you need to understand the various ways to get venture capital.
If you’re someone looking to acquire a business, this article is for you. Keep reading to learn more about five ways to fund business acquisitions to grow your portfolio.
1. Seller Note Financing
Seller note financing is a funding option where the business owner funds the financial transaction. They can structure a loan for the amount the buyer is short or finance 100% of the asking price.
The seller increases their revenue by financing the purchase because they are also earning interest on the loan. They also have the first option on the business if the buyer cannot honor the loan terms.
2. Angel Funding
If you’ve ever watched the popular television show Shark Tank, you have a sense of what an Angel Investor is. The difference is, finding an angel investor for equity financing isn’t as cutthroat as the show makes it out to be.
Using the same premise, people approach wealthy business people looking to invest in business startups. The terms are often more favorable than a traditional bank.
3. Bank Loan
Speaking of traditional banks, outstanding credit history and a bit of equity can go a long way in securing a bank loan with favorable terms. Banks are still in the lending business and offer better terms for business acquisitions.
4. Private Investors
Business consulting services can show you how to utilize creative financing to assemble a team of private investors. These individuals can range from family members to successful business people throughout the community.
You’ll need a strong business plan and the ability to present a viable repayment plan. Building strong relationships with private investors will help you grow your business portfolio.
5. 401K Rollover as Business Startups (ROBS)
A Rollover as Business Start-up (ROBS) is implemented to allow individuals participating in a 401K to access funds to purchase a business. Since 401Ks are investment accounts that use your money to invest in other businesses, it makes perfect sense for the IRS to allow individuals to use their money to invest in a personal business venture.
It’s important and highly recommended that you speak with a business financial consultant whenever you’re making a withdrawal on retirement funds.
Acquiring Businesses Isn’t Hard When Funding is Secured
Don’t let a business acquisition opportunity slip away due to lack of funding. These five tips are surefire ways to get the money you need when you need it.
The goal at Solomon RC Ali is to help people like you fund and scale businesses to become an industry leader. Schedule a consultation and learn more about raising capital.