How to finance growth of your business

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Even though there are different opinions, around 20% of businesses fail in their first year, rising to 60% in the first three years. While every business needs a firm foundation, one element often overlooked is a growth strategy. Any business should be compared and contrasted to competitors on a relative basis. If you are growing by 10% per annum, but your competitors are growing by 20% per annum, then, in reality, you are moving backwards in relative terms.

Research shows that most business owners are hamstrung in their growth strategies because of a lack of capital. There are various ways to raise money to support your growth strategy and strengthen management in the process. When looking to grow your business, it is vital to appreciate and respect debt and not be scared of using external finance to leverage your growth plans.

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Equipment finance

There will be a time to be conservative about capital spending and a time to seek outside assistance in any business. One such area is equipment financing which can be a handy way to increase productivity in the short term. There are numerous reasons why you may seek equipment finance, such as:-

• Replacement of outdated equipment
• Ramping up your output with additional machinery
• Replacing old and unreliable equipment
• Introducing new business lines which require new equipment

If you recognise an upswing in demand for your products, it is vital to act swiftly. You can bet your bottom dollar that one of your competitors will if you don’t take up the opportunity. So how does equipment financing work?

This very popular type of business finance allows you to acquire machinery immediately rather than save up for a cash purchase further down the line. Here at Crester Credit, we have positioned ourselves between traditional banks and expensive pay-day loan companies. We see our customers and potential customers as people/businesses instead of just a number. While we have to be responsible in our lending activities, we prefer to take a long-term approach. Consequently, we can offer highly competitive terms for those looking to implement a business finance growth strategy.

The ability to stagger repayments of equipment finance over several years, based on affordable instalments, will undoubtedly assist with cash flow. There are various reasons you may take on equipment finance, but it comes down to whether the acquisition of new equipment will improve your productivity and profits. If the improvements are above and beyond the finance cost, then it is a no-brainer.

Joint ventures with silent finance partners

When operating in business, it is essential to have an ego and confidence in your abilities and business, but you also need to be sensible. Consequently, when looking to raise capital to fund growth in business, many people will look towards ventures with silent finance partners. This is a particularly popular route for those operating in the New Zealand property market, where there have been and continue to be significant opportunities. So how does this work?

Historically, there has always been strong interest in New Zealand property from investors in Singapore and other areas of the Far East. Many property developers in New Zealand travel to the Far East regularly to seek financial investment. When looking for a silent partner, it is rare for any additional guidance to be offered or requested. It is simply a case of a third party putting up the money for a share in the property development and sharing the ultimate income streams/profits. This all sounds very simple, but…………..

If there is competition amongst property developers looking to attract outside finance, you will need to make an attractive proposition. This will ultimately reduce your profit margin and, if the margins are relatively thin, could eliminate any profit if there are additional unexpected costs. Any finance partner in their right mind would also seek the posting of collateral to protect their investment. On occasion, this can prompt property developers to look elsewhere.

Thankfully, New Zealand has a highly competitive and wide-reaching financial services industry. Here at Crester Credit, we offer a range of finance options to fund investment in property, including business finance, bridging finance and asset finance. While the terms and conditions available will depend upon the project and your financial situation, you will not be in a position of competing with others for our finance. As we touched on above, we also prefer to create long-term business relationships instead of focusing on short-term profitability.

Business grants

As many have seen during the Covid pandemic, financial support from the government has been essential to allow many businesses to continue. Much of this financial assistance has been offered with relatively few strings, and not all financial support is repayable. However, it is crucial to focus on more traditional times and the pros and cons of a business grant.

Pros of business grants

When you look at business grants from a distance, it is sometimes difficult to see the long-term benefits for those providing the finance. However, from the government’s point of view, if a business grant successfully supports a viable business, this would create employment opportunities and tax income. Some of the main benefits of business grants include:-

• Some grants don’t have to be repaid
• Immediate boost for cash flow
• Often come with additional guidance and support
• No obligation to share future profits

Cons of business grants

On the surface, a business grant looks like the perfect route for many companies looking to instigate a growth strategy. However, there is an array of issues to be aware of with regards to business grant finance which includes:-

• May involve hours of paperwork preparation
• The submission process can be long and daunting
• Finance can come with an array of conditions
• Will often involve regular reporting to authorities
• Some grants are repayable in the longer term

We know from experience that many businesses prefer to retain a degree of control when seeking external finance. Consequently, our business finance service has experienced significant growth in recent years. Competitive terms, together with additional guidance and assistance where appropriate, is often the perfect mix for business entrepreneurs – the choice is the key. Remember, nothing is stopping you from mixing and matching Crester Credit finance with business grants where appropriate, but not all business grants are as simple as you might expect. We may also be able to help with business grant submissions!

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Venture capital

Over the years, the venture capital industry has attracted an often unwarranted reputation for a ruthless approach to investment. The reality is, the greater the potential risk, the more the expected potential reward. It really is as simple as that.

Pros of venture capital investment

There are some pros and cons to consider concerning venture capital for those faced with growth in business opportunities. Some of the benefits include:-

• Colossal venture capital investment funds waiting for the right opportunities
• There will always be funds available for well-managed businesses
• Specialist venture capital groups can also offer additional advice and guidance
• Venture capital investors often have ambitious targets
• Existing management incentives are often part of investment arrangements
• Investment can take the form of loans, equity or debt instruments

Cons of venture capital investment

Obviously, venture capital companies need to protect their investment and monitor the performance of your business reasonably closely. So, it is also essential to consider the potential downside to venture capital involvement in your business:-

• Investment terms and conditions can be challenging
• Unattractive investments will be simply dismissed
• Future targets will continually push business management
• Failing investments will be jettisoned relatively quickly
• Regular reporting is required to monitor the performance of a business
• Business entrepreneurs will need to give up a degree of control

One of the most demanding challenges many business entrepreneurs face is giving up an element of control over their “baby”. The truth is that whether you are seeking venture capital finance, business grants, equipment finance or any other type of third-party assistance, you will need to give up a degree of control. In reality, when looking at venture capital investment, these investors will have a significant stake and, therefore, a vested interest in making your business even more successful.

As a finance provider in New Zealand, here at Crester Credit, we have an array of contacts in the financial markets. These include venture capital investors, many of whom we have a relatively close working relationship with.

Merging with complementary businesses

When it comes to merging with complementary businesses, this can often be a helpful way of amalgamating operations to maximise returns on reserves, cash flow and outside finance. Unfortunately, as we touched on above, many business entrepreneurs let their egos get in the way of a potentially lucrative merger. However, to put it another way, would you rather have 100% of a relatively small pie or 50% of an enormous pie?

Pros of merging with complementary businesses

There are numerous benefits when it comes to merging companies which include:-

• Potential to reduce business running costs
• Efficiency savings
• Productivity improvements
• Enhanced cash flow
• Enlarged group may open additional funding options
• Opportunities to cross-sell products/services

Cons of merging with complementary businesses

As ever, all business transactions have potential drawbacks, which in this instance can include:-

• Reduced control
• Potential for management conflict
• Some larger companies are slower to react to changing trends
• Extended management chain can stifle growth in business

While there are potentially huge benefits in merging with complementary businesses, some drawbacks are detailed above. On the plus side, a more robust management structure with more combined experience can be a game-changer when planning a growth strategy. However, as a business grows, founders must relinquish a degree of control, especially over day-to-day activities.

The combined profitability and cash flow of a more extensive operation can often strengthen the argument for additional finance. This could be a business loan, business grant or, in the long term, working with venture capital groups. Remember, if a company is over-dependent on one person (very often the founder), what happens if they are not around for a prolonged period?


If you are not targeting long-term growth in business activities, you are effectively moving backwards against your competitors in relative terms. Yes, you need to be realistic and, to a certain degree, cautious regarding your growth strategy, but taking an overly conservative approach could mean missing out on growth opportunities. Focusing on the short, medium and longer-term can be challenging as a stand-alone business entrepreneur – sometimes, there is strength in numbers.

As we touched on above, there are various funding opportunities available, and it is simply a case of finding the best one for your situation.


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