How to Protect Your Equity When Your Business Is Thirsty for Cash

When it comes to financing the growth of your business, you may find yourself facing a difficult choice between the lesser of two evils. Selling shares in your business can provide an immediate cash injection, but it means giving up some of your valuable equity stake. Borrowing money from a bank, on the other hand, can be costly to repay, can limit your growth, and often requires that you provide a personal guarantee.

However, there is a third option: customer financing. This approach involves convincing your customers to prepay for some or all of your product or service, providing you with the necessary working capital to drive growth. This method can be a great alternative to selling equity or taking on bank debt and gives you access to cash without having to sacrifice ownership or pay interest.

How Brad Lorge Got His Customers to Fund the Growth of His Business

In 2015 Brad Lorge founded Premonition, a technology company that provides logistics software to streamline delivery operations for large enterprise companies. While working with big businesses brought in good revenue, large enterprise customers were slow to make purchasing decisions, and when they did decide to buy, getting them up and running was slow and costly. If an implementation failed, Premonition risked losing…