Finance

Weighing your Financing Needs

Traditional financing is tested, tried and true—a financial lifesaver for many companies. But, traditional financing can often be slow to materialize and onerous to obtain—not the best recipe for a business sensing a need to pounce on an opportunity now.

Hence, the appeal of alternative-financing methods, which arguably are a bit esoteric and not exactly tested, tried and true. Time will tell, of course. So how does one sift through the alternatives to find the right one for the right growth strategy?

Here are some decisions to ponder: What happens after a debt arrangement scheme? Do you want to retain as much equity as possible with the current owners to prevent share dilution and maintain management control? If so, one of the many debt instruments like convertible debt, a capital equipment sale and lease back model, or a crowdsourcing site like FundingCircle offer decent rates without an ownership stake.

Are you comfortable with a capital infusion for a small equity interest, but you don’t want to go the private-equity route because they like to run things their way? A Business Development Company (BDC) and a passive non-preferred equity arrangement both offer the means to give away a bit of the company for cash, without giving away the store or its control. (For more on BDCs, see p. 42.)

If you have no problem with a more robust equity-for-capital strategy, a crowdfunding site like CircleUp presents a way to tap seasoned investors in your industry that believe in your company’s value proposition and simply want to see it flourish. They may even have some good advice to offer, without making you feel that they’re the ones in charge.


Chief Executive

Chief Executive magazine (published since 1977) is the definitive source that CEOs turn to for insight and ideas that help increase their effectiveness and grow their business. Chief Executive Group also produces e-newsletters and online content at chiefexecutive.net and manages Chief Executive Network and other executive peer groups, as well as conferences and roundtables that enable top corporate officers to discuss key subjects and share their experiences within a community of peers. Chief Executive facilitates the annual “CEO of the Year,” a prestigious honor bestowed upon an outstanding corporate leader, nominated and selected by a group of peers, and is known throughout the U.S. and elsewhere for its annual ranking of Best & Worst States for Business. Visit www.chiefexecutive.net for more information.

Share
Published by
Chief Executive

Recent Posts

Cross-Border E-Commerce: A Critical Expansion CEOs Can’t Ignore

Companies must act quickly to leverage cross-border e-commerce or risk falling behind competitors already capitalizing…

21 hours ago

Moving Employee Care To The Middle Of Things At Tyson Foods 

Chief people officer Johanna Söderström has done the obvious, the necessary and the difficult in…

22 hours ago

Fixing The Childcare Challenge

Boosting productivity and talent retention are among the pluses that providing support for working parents…

2 days ago

What Trump’s Win Means For Labor And Employment Law

The 2024 election results will have a dramatic impact on workplace regulation at the federal,…

2 days ago

Canadian CEO Outlook Dimmed In Q4 

Chief Executive’s survey of nearly 300 CEOs across Canada finds politics, domestic and abroad, driving…

3 days ago

How To Navigate Each Phase Of The CEO Journey

Successful CEOs are built, not born, through constant adaptation and reinvention.

4 days ago