man doing calculations
Andrew Sachs, Managing Partner at Mauloa, a private investment firm that invests in small businesses, shares expert advice for businesses seeking outside capital. — Getty Images/SARINYAPINNGAM

If you could create your own fantasy board of directors, who would be on it? CO— connects you with thought leaders from across the business spectrum and asks them to help solve your biggest business challenges. In this edition, we ask an expert about affordable ways to show employee appreciation.

No matter what type of small business you own, capital is essential. It can help you run your company and meet your goals. In general, there are two types of capital: debt and equity. While debt must be paid back, equity comes from external investors and doesn’t need to be repaid on a set timeline.

In exchange for equity, you’ll offer a stake in your company, which is usually an agreed-upon percentage. So how exactly can you benefit from equity? Andrew Sachs, Managing Partner at Mauloa answers that question. ...

Valuable experience

With debt, you take out a loan that you’ll repay eventually. The lender doesn’t have a vested interest in your success.

Equity, on the other hand, requires corporate governance (i.e., quarterly board meetings) and allows you to learn from the experiences of your investors. Since I’ve invested in 45 separate businesses and sat on their boards and one of my partners ran a $7 billion revenue company, we can share different outcomes that we have experienced so that your company can make the most informed decisions. Knowledge is power and that’s what you get with equity.

Less risk

Compared to debt, equity is less risky. While you will have to bring on an investor or partner and own a smaller share of your business, there is no chance of foreclosure.

We also invest as a noncontrol investor with no exit timelines. You and your partner are aligned in terms of the outcomes and success of your business. As long as you bring on the right investment partners, they’ll add value to your company and help you grow.

Compared to debt, equity is less risky. While you will have to bring on an investor or partner and own a smaller share of your business, there is no chance of foreclosure.

Andrew Sachs, Managing Partner at Mauloa

Resources for growth

At the end of the day, businesses are people and people like to grow. Through an equity investment, you can hire higher quality employees that you weren’t able to afford before, add a new product or line of business, and in turn expand your company in whatever way you’d like. It’s crucial if you’d like to take your company to the next level.

Assistance with business acquisitions

Acquisitions are one of the most effective ways to grow your business. That being said, it’s a lot easier to make them when you have some money and experience from an investor.

You may be able to buy your competitor down the street because they want to retire, for example. A lot of highly successful and profitable businesses start as a bunch of small companies, so this strategy is certainly worth exploring.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

Applications are open for the CO—100! Now is your chance to join an exclusive group of outstanding small businesses. Share your story with us — apply today.

CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.

Apply for the CO—100!

The CO—100 is an exclusive list of the 100 best and brightest small and mid-sized businesses in America. Enter today to share your story and get recognized.



Published