When you own a business, it’s a good idea to have a medium-term goal in mind. This way, early concepts about how to proceed can percolate through, leading to breakthroughs when filtering to find the best ideas to pursue. Here is how to grow your business and then make it passive later.
Organic Growth vs. Funding Growth
Businesses can be funded organically and through the investment of additional capital. Let’s look at each of these:
Organic Growth
Organic growth is ideal for people who disdain any kind of borrowed money either in their business or personal life, or both. Other business owners feel that if the company is growing fast enough on its own with sufficient profitability at present, then borrowing for further expansion is not required.
It depends on the type of business whether that’s the case or not. For instance, a retail chain with two stores will likely need to borrow or create a franchise to expand because organic growth will be too slow.
Funded Growth
Funded growth is as it sounds: borrowing money or taking on investors by giving up equity in the process. Either way, when looking at the majority of larger businesses, they got there using borrowed money. The few that didn’t either remained small or were serial entrepreneurs who used their last startup exit to fund their current business.
Figure Out What Money Will Be Needed for Growth
Look at what expansion is required to get from point A (where the business is now) to point B (where you’d like it to be in a few years). Then look at what funding options are available. AdvancePoint Capital’s fast and easy business loans provide one solution. With enough capital to invest heavily and see solid returns from the deployment of additional loaned capital, the business has years of growth ahead of it.
What Does Passive Income Really Mean?
The idea with passive income is that it’s derived without doing any work to receive it. The truth is that it’s mostly upfront work and lots of it that leads to passive income later. It doesn’t magically arrive on its own or without proper planning. Even with an investment portfolio, it still needs to be managed. So, it’s not entirely passive either. Really, nothing is if you’re doing it right!
How to Retain Your Business, But Make It (More) Passive
The right type of business is required to be passive. It’s also necessary to get yourself out of the business by delegating operational responsibility to others.
By separating yourself from the business, you’re able to step back. While you may still look at the strategic side, the day-to-day operational hustle should no longer be your concern.
It can require months or years to prepare a business for an owner who will be taking a backseat. Grooming a successor and building out the management team are all necessary steps. However, don’t forget the emotional side too. Stepping away is difficult, especially if you’re a type-A personality.
While growing the business to a sufficient size to live off it and step back will require years, it’ll be worth it in the end.
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June 15th, 2021 by financetwitter
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