The vast majority of companies will need outside capital to grow at more than twenty percent or so compound annual growth rate (CAGR). This can vary a lot by industry, sales cycle, margins and other cash-flow factors. Some industries are more capital intensive, requiring upfront investment in plants, equipment, people, research and development or other things. However, generally if you plan to grow a company over $1M in sales, you will need a working capital financing strategy projecting these needs over three or more years.
We define scaling as over fifty-percent growth. So, unless your gross profit margins are exceptional, and your sales cycle and costs are very low, you will likely need outside investors to grow this rapidly. You can always choose to grow more slowly at whatever rate your cash-flow can support, but that may cause you to lose potential market share, especially early in a markets' life. Or you can seek some debt financing which will require a history of positive cash-flow.
We have a course on raising capital that shows everything you need to do to be successful, where about ninety-five percent of companies will not succeed. You can see our courses and coaching packages that help clients raise millions here. Or call (619) SCALE06 to get help determining the best financing strategy. We also offer consulting and coaching to get you through these hurdles.
Also check out my blog where I have loads of articles on entrepreneurship, scaling and raising capital.
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See our courses and coaching programs related to scaling here.
Bob Norton is a long-time Serial Entrepreneur and CEO with four exits that returned over $1 billion to investors. He has trained, coached and advised over 1,000 CEOs since 2002. And is Founder of The CEO Boot Camp™ and Entrepreneurship University™. Mr. Norton works with companies to triple their chances of success in launching new companies and products. And helps established companies scale faster using the six AirTight Management™ systems. And helps companies successfully raise capital.