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David Packard (the Packard in Hewlett-Packard) liked to say more companies die of indigestion than starvation.
Robert Herjavec, a recent Big Deal guest, said, "…urgency creates opportunity, but patience builds wealth."
Translation: growth without strategy kills more businesses than slow months do.
Growth is necessary, but every new hire and every new location costs you cash before it pays you back. We call it the Growth Tax, and it's why owners doing everything right can still feel broke.
So here's 5 ways to pay it without emptying your accounts.
TOGETHER WITH SOFI
Contrarian Thinking is a compensated partner of SoFi.
Growth opportunities come with expiration dates.
The equipment auction ended Friday, before you heard back from your bank. And somebody signed the lease next door because your loan didn't get funded in time.
SoFi's Small Business Loans can help business owners move when the moment is right, with access to up to $250K* and funding as soon as 24 hours after approval^.
The application is simple, and SoFi's loan has clear, upfront pricing and terms of 6, 12, 18, or 24 months. Weekly and monthly repayment options are available, and if your investment pays off sooner than expected, no problem. You can repay the loan early with no prepayment penalty.
Whether you're a solopreneur, leading a small team, or growing an established business, a SoFi Small Business Loan could help fund your next move.
In other words: built for Main Street.
Click HERE to see what options could help you make your next move. Terms apply.
See the bottom of this newsletter for more information and disclosures about SoFi Small Business Loans.
While BNPL isn't a great deal when it comes to getting a new TV, it can be a creative cheat code in the business world. Because it turns out, you don't have to start from zero to grow…
Think about your competitor across town. They've already got the customers, the crew, and the contracts you'd have to spend thousands of dollars and a dozen years assembling. So why not just buy 'em out?
Here's where the creativity comes in: you can structure a deal like this as an earnout, where you pay a portion upfront, and the rest comes from the business's future performance. That way, the acquisition funds itself as it delivers. Plus, with an earnout, if it under-delivers you could potentially pay less.
Start smaller than you think and don't overlook any options, because you don’t have to buy a whole business.
You can acquire a competitor's customer list, a retiring rival's phone number, a delivery route, or a book of business. All of it is growth you can buy upfront instead of grinding it out over time.
Want to expand into a new space or remodel your existing one? Your landlord might bankroll it.
It's called a tenant improvement allowance, or TI, and it's standard practice in commercial leases for a landlord to contribute cash toward the buildout. These are usually pre-negotiated and paid out after the improvements are made, so read that contract carefully.
Why would a landlord do this in the first place?
An empty unit earns them nothing, and a built-out space with a paying tenant is worth more to them than the check they cut you. Most owners just accept the first lease draft they're handed. But if you negotiate the TI allowance, you could walk into an expansion with someone else covering part of the tab.
This is one of the most slept on ways to fund growth without it hitting your bottom line. So before you sign a lease, go ahead and ask, "What's the TI allowance on this space?"
If they say there isn't one, what they really mean is there isn't one yet.
Time to negotiate.
McDonald's didn't build tens of thousands of restaurants and serve over a billion with just its own cash. Franchisees pitched in quiiiite a bit.
Here's the franchise model in a nutshell: other people fund your expansion because your playbook makes them money too. It's a classic win-win, and you don't need the golden arches to run this play.
If your business works because of a repeatable system, you can:
By teaching other people how to do what you do, you can exponentially increase your growth. Each new location gets funded by the operator who runs it, and your growth scales with your system instead of your bank balance.
Plenty of gyms, restaurants, repair shops, and more didn't become mega-successful until they franchised.
The catch: your playbook has to be baller, and it needs to be written down. If the business only works because you're in the building, you don't have a franchise. Document it and see if someone else can copy your homework to get started.
In 2009, a scrappy Scottish brewery called BrewDog needed growth capital and wanted investors who would go to the brewery and be part of the culture. So they sold shares directly to their drinkers, calling it Equity for Punks.
The campaign raised £75M in growth capital and minted evangelists with a financial reason to order another round.
(The eventual fall of BrewDog is a cautionary tale of PE we'll cover another time…)
Equity crowdfunding makes this clever growth option available to regular businesses now. Platforms like Wefunder and StartEngine let everyday customers invest in the companies they already love.
Your best customers already believe in you, and some of them would love to own a piece of the thing they brag about to their friends. Plus, when you take investments from your fans, you don't always have to pay them back in cash.
Special perks, future discounts, or even just a dedicated service line can be all it takes to turn your best customers into investors.
The Growth Tax never goes away, and every business that gets bigger has to pay it somehow. But every play on this list runs on creative capital hidden in the couch cushions, so you don't have to empty your own pockets to fund growth.
Scaling doesn't wait, but there's no need to grow yourself broke.
And if you want more detail on how to know if it's time to put the pedal to the metal or pull back, Codie's book Own or Be Owned gives you her exact framework for managing growth.
One of our Growth Boardroom members, Meg Kinnerk, was able to use systems featured in the book to cut $150K in bloat.
And while you might not get the same results as Meg, if you want a taste of what Own or Be Owned could do for you, claim your FREE ticket to the virtual book launch HERE.
Come with questions, get creative, and grow with a plan.
- Team Contrarian
The information contained here is educational, may not be typical, and does not guarantee returns. Background, education, effort, and application will affect your experience and the profitability of any business. Individual results may vary.
Contrarian Thinking has a paid partnership with SoFi.
SoFi Small Business Loans are originated by SoFi Bank, N.A.
Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To be approved, a borrower’s home address and primary business operating address must be in the U.S. or U.S. territories, and you must meet SoFi's underwriting requirements in SoFi’s sole and absolute discretion. Not all borrowers receive the lowest rate. Lowest rates are reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your business and personal creditworthiness, business revenue, and other factors. Rates and terms are subject to change at any time without notice. SoFi Small Business Loans may not be used for personal, family or household purposes. See SoFi.com/legal and SoFi.com/eligibility for more details.
Loan amounts range from $2,500-$250,000. The annual percentage rate (APR) is the cost of credit as a yearly rate and reflects your interest rate.
^ As soon as 24 hour Loan Funding: Most borrowers receive funds within 24 hours if the loan is approved and the agreement is signed by 2:45 PM ET. The 24-hour funding timeframe excludes funding on weekends and federal holidays. This timing is not guaranteed, and delays may occur outside of SoFi’s control, such as if inaccurate information is submitted, or the receiving provider declines the transfer. Your bank may have rules on when the funds become available.
*Terms and conditions apply
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