I always get the question of whether you should raise money if you're profitable. In truth, it's a very difficult question. A lot of it comes down to the founders and goals for the company, but it's important to think about where the additional capital would go to for your business. To help answer this question, I've written a few areas of the business where capital can help, even if the company is profitable.
1. Hiring A Great Marketing Team
Employee's happiness is directly proportional to the growth of a company. Some businesses chose to invest in employees for making sure that the customers receive the high-quality services. It also helps in generating fresh and innovative ideas. If the small team is concentrating on all the tasks, it adds burdens to them.
When the staff is going to the mental strain, don't expect great results from the team. By taking an investment, you can provide benefit packages and productive training programs to your employees. Many companies have to forfeit certain perks to their team due to a lack of funds, and don't realize the consequences to the company's culture. Additional capital can be used to improve or preserve a great team dynamic, which will pay huge dividends down the line.
2. An Investment Can Help in Enhancing Customer Experience
Big giants in the market conduct rigorous research by scanning all the reviews and other brand mentions. For improving the product and service offerings, a feedback mechanism is formulated for accessing the information in a simple way. Then, they advertise the product by making all the required changes. In this way, they shape their marketing strategy by tapping the mood of the audience. All these efforts come at a big price. With an investment, your can address the key issues of consumers by investing in survey reports.
When you start out, you have to go interview customer one by one to get feedback. Data is always going to be the compass for your decision-making, so raising money to make sure you have the most accurate compass isn't a bad way to go.
3. Additional Capital Helps in Expanding Your Current Base
Lets consider two situations:
You want a better place for getting better exposure.
You need a new location for accommodating the new staff.
In both the cases, you need to make some initial investment by keeping your core business operative. If you have big ideas for the expansion, don't suppress them with the 'no money' excuse. When you move in the constructive direction, you must have the capital to fund the expansion and prepare for early losses from the new location.
4. More Capital Means More Growth Opportunities
If you're thinking about taking your company international, raising money to do so can be a great decision. In fact, we've been seeing this in other countries all over the world, one of the most notable has been Norway.
According to World Bank Group, it is very easy to set up something in Norway due to various business reforms. Most businesses don't have enough cash to create a master plan for designing the product. To convert this golden chance into a big opportunity, Norwegians can take the loan for shaping their business dreams into reality. As startups begin popping up all over the world, I predict more and more countries will increase the number of angel investors that they have. For US based businesses, that means to compete you might need to raise money to keep up.
The best way for considering an investment as an option is to look out for the return on your investment. If you are going to raise the value of the company significantly from the additional capital, there is no harm in taking the money. Just make sure you know what the cash is going to be used for, otherwise you're just giving your company away for no reason.