5 Different Ways To Raise Capital To Purchase Assets
Here are 5 different ways to raise capital to purchase assets for your business:
- Renting Out Spare Space
- Selling Shares To Staff
- Secondary Income Streams
- Use Leasing Instead of Purchasing (The Quickest Option)
Some of these suggestions may have been tried in the past by yourselves, but that doesn’t mean they can’t be tried again. Others may not be feasible at the moment due to your current circumstances.
However, if you need to purchase new equipment, land or premises and are experiencing liquidity or capital issues, then think about some of these simple, if not a little left-field, suggestions.
Assuming that you’ve already exhausted the tried and tested methods of raising capital – attracting outside investment, using personal capital and business loans or credit lines – try some of these…
Renting Out Spare Space
Work out if you have any spare physical space within your business. Even if you don’t think you do, because each employee in the office has their own desk or that storage yard is holding things which “will be needed one day”, a simple reorganisation can create more space. This space can then be rented out.
If you’re unsure how to create space in the office, for example, did you know that offices are never 100% full? Find out more about occupancy ratios and how you can alter the desk to staff ratio in your business and free up space to become a co-working office.
Co-working is especially popular thanks to the ever-growing “gig economy” in the UK. Freelancers need productive working environments and renting a desk in your office might be just what they need.
Likewise, you could repurpose a storage yard or lock-up for use by anyone, from artists to bands, to professional eBay sellers who need a studio.
Selling Shares To Staff
If outside investment isn’t practical or achievable, opening up some shares in the company to staff is another viable option. Just bear these points in mind when deciding which employees to approach:
- You need to offer something tangible in return.
- The staff approached need to understand why this is happening and be able to appreciate it’s to make the business grow and NOT because the business is struggling.
- Staff who now hold a stake in the company will need at least some say in business decisions unless you can agree that they are effectively a silent investor when it comes to strategic decision making.
- Don’t sell employees a dream that isn’t achievable. Even the most level-headed staff may interpret the situation as they’re now ‘The Boss’ or that they one day will be. This can lead to disappointment.
- Likewise, if you approach a senior manager, for example, make sure that their own team or peers do not see it as preferential treatment of some sort. This could rock the boat and lead to a lowering in morale or staff turnover.
Services such as Crowd Funder and Go Fund Me are experts at helping businesses attract investment in exchange for some sort of return. The premise works by pitching your business and goals on their website, with justification as to why it’s a good thing for it to happen.
A word of note, your campaign won’t be successful if the underlying reason is “so we can make more money!”
Once your pitch is ready, you organise set amounts that people donate to the cause. These donors then need to receive something in return. Typically, the smallest amounts receive a token thank-you gift in return, but the higher up the donor tiers you go, the bigger the reward.
It’s worth looking into if you have a worthy cause or angle and a skilled marketing arm.
Second Income Streams
Another alternative is to look into secondary (or more) income streams. This can be done by using existing resources in a different area or by playing a longer game and investing time in a relationship, now, which will pay off further down the line.
For example, your business may operate solely in a particular field. But the skillset you offer may be a subsidiary service within another area: a digital marketing agency offering consultancy services to their client’s network for a fee; or a plumbing contractor, who specialises in social housing, providing a maintenance service to the offices of the same councils who normally employ them to look after domestic properties.
Use Leasing Instead
And, finally, the denouement of this post. If the capital amount needed to purchase the assets that your business needs is too large and your lines of credit are exhausted, leasing is the quickest and easiest option. The leasing vs buying argument is one you have probably considered, but leasing really is the simplest option compared to these different ways to raise capital above.
And for the record, this advice is not coming from a Lease provider.
The leasing industry has grown exponentially over the past couple of decades because businesses are taking advantage of being able to treat assets as their own but not having to be burdened with the ownership responsibilities.
It’s more or less certain that your business will have leased or still is leasing some assets which you use to operate. This could be leased vehicles for your sales reps or site teams, which are most well-known leased assets alongside leasing your business premises.
But absolutely anything can be leased if you need it to be. From water coolers and coffee machines to data on a remote server and accounting software, there’s no need to take full ownership of anything in your office. Outsource ownership of everything non-critical.
There are cons, of course, like anything in life, but there are so many benefits. Namely, you’ll be able to get hold of those assets you require much sooner than if you were to try and raise the capital needed to purchase outright.
If you want to find out more about how leasing might be right for your circumstances or just to see the full picture, take a look at this free post…