To grow or play it safe? That’s the million-dollar question…

Still, that theory only works to the point where the business has a real need to grow, and grow fast, and for that to happen, there is no substitute for cold hard cash. We’ve had tough times recently and it has often led to a ‘survive today’ mentality which in some cases has forced boot-strapping and cost cutting.  Now though, there are indications that some pressures are easing and it’s time once again to think about the long game. To do that, it’s like a certain market trader used to say, “you have to speculate to accumulate”. Still, raising finance can be a minefield.

Do you just need working capital or are you looking for growth capital. Do you want angel funding or bank funding? Is it time to play with the big boys and involve the VC’s or can you make do with your friends and family?

A friend of mine runs a mid-sized travel company. He has seen nice growth levels over the last couple of years and after initial bootstrapping, moved onto angel funding. He didn’t raise huge amounts- just enough to see the business comfortable.

Then, the recession hit. He was forced to adopt a ‘survive today’ mentality and has been unable to work beyond that. With the BA strikes hanging in the air, he now has the threat of customer refunds to the tune of £400k hanging over him. His problem? His working capital levels are depleted and he is struggling to find cash. Angel investors have deemed him too high risk and the banks have done what they can but he still struggles. His biggest regret in all of this? “Under capitalizing when on a growth spurt”. He feels that where he to take the cash before he really needed it. His business would be in a better place and would probably live to see another day. As it is, to say the companies’ future is uncertain is putting it mildly.

So, what to do in all of this? With my businesses, I am bootstrapped up to my waist and now I’m calling in the angels.  I have my business plan ready to go and am looking to raise an amount which will get us through today and also get us ready for tomorrow. I’m excited about 2010 and the expansion which it will hopefully hold.  As a wise man once said, “she who dares, wins…”

Do you agree with Michelle?

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