You have started a factory or a business but it’s languishing! Maybe you have not added the necessary infrastructure or you may you have not taken into account some of the marketing and advertising costs! You may have to completely revamp the entire system or add/replace a few human and non human resources! Is there anything common in all the above examples: yes, the capex or the Capacity expansion! As a business, if you hope to grow, you need to think for the long term and you need to invest according to the same logic. No business which is limited by capacity has ever been able to breach boundaries. Once you know that your business has been steady, you need to make a place for the next round of expansion strategies! There are many ways of expanding your business. One is the organic way of expanding business and the other is the in organic way of expanding business.
When you expand your business in the organic way, you are undergoing a capex expenditure, which includes more space, more human resources, higher degree of productivity etc. This is the better strategy of the two as you have control over a lot of variables. The second option is the inorganic option of growth, which related to mergers, acquisitions and takeover. A business company takes over smaller company to fuel its expansion. This is the quickest way to grow, but it can be quite expensive, on the valuation front. India has seen a lot of start ups and large companies set up in the country. Although the job market is hit by automation and the global ‘lack of appetite’, India has a flourishing industrial regime. One of the reasons why Indians are so successful recently in expanding business is the availability of finance.
For entrepreneurs and corporate businessmen, there are quite a few options when it comes to getting their finances, at the right time! A large number of banks have kept interest rates on business loans to be quite competitive, to kickstart the investment cycle. You can wither borrow from a government bank or a private bank. There are many non banking financial corporate who will be willing to lend you money as well. However, the interest rates for business loans charged by NBFC (Non banking financial corporation) tend to be quite high. Due to the rising competition among banks and financial institutions, you will be able to garner a good deal, if you can negotiate properly! Business loans, provided you have the necessary pre-requisites can be cleared in a week, and thus, you can be assured of the financial stability of your company or business. There are many ways to raise money and the stock market is one of them. However, most companies rely on banks and NBFC’s as the interest rates on business loans charged by these institutes tend to be lower and thus, more profitable to the business. If you want to go in for a capacity expansion, don’t delay! Approach your bank today!