Business Archive

A smaller share can lead to bigger profits

If you want to get ahead in business, parting from some of what you have built so far may sound daunting. With a well-chosen equity finance deal, however, you may find that owning less means earning more.

Any investment finance relationship inevitably means selling off part of your business. It is often hard selling something you have worked hard to create, but if someone is interested in buying into your business, that in itself is a badge of success. The key to doing good business is always to keep moving, to recognise opportunities and be ready for change when it becomes necessary. Selling shares need not mean losing control of your business, even if you have to take your investor’s views into account when making management decisions. It can mean that even if you are left with fewer shares, your overall stake is worth more.

Increasing value

The value of your business is dependent on its size, productivity, position in the market and reputation. All these things can potentially be boosted by equity finance, sometimes immediately. Even if you have only just signed a deal, you may find that increased interest in your business boosts the value of your shares. Over time, having more money to invest will strengthen it further, creating opportunities to expand and exploit developing markets. This means that an initial loss in the overall value of the shares you own can turn around, making you, as well as your business, substantially better off.