There is a modern business obsession with "raising capital." Startups and growing companies glorify the process of pitching to angel investors and venture capitalists.
But established, profitable business owners know a fundamental truth: giving away a percentage of your company is the most expensive money you will ever take.
The True Cost of Equity When you bring on an investor, you aren't just giving them a board seat; you are giving them a permanent slice of your future. If you give away 15% of your business for a $200,000 injection today, and your business grows to a $5 million valuation, that initial $200k just cost you $750,000.
Furthermore, you sacrifice autonomy. You now have a partner who dictates terms, scrutinises your decisions, and demands an exit strategy.
The Mathematical Advantage of Debt Debt, on the other hand, is a simple, finite transaction. You borrow the $200,000, you pay an agreed interest rate, and you maintain 100% control of your company.
- Tax Deductible: Unlike paying dividends to an investor, the interest you pay on a commercial loan is generally tax-deductible, further reducing the actual cost of the capital.
- It Ends: Once the loan is amortised and paid off, the lender goes away. You keep all the future profits generated by the growth that the loan facilitated.
Finance the Growth, Keep the Pie If your business has strong cash flow, strong assets, or strong invoices, you have leverage. You don't need to sell a piece of your life’s work to fund your next warehouse, tech rollout, or marketing campaign.
Don't give away your equity. Let’s look at your commercial borrowing capacity today. Reach out to Geared Finance to explore your options.
