I have a question, What are some of the ways I can go about securing additional financing to expand my firm?

Although germane to this entry, I’ll try to explain what I do. I’m not sure I know how to answer this even though my primary business is helping new companies and emerging designers to launch their lines. Other than very short term (less than 30 days), I’ve never sought any financing since I started. I’m very fiscally conservative; I fund business improvements (not sure what you mean by “expansion”) through revenue, plowing it back into the business. I can’t speak for you but in my case, expansion would amount to increased product and service offerings, neither of which would require appreciable capital to the extent I’d need funding. I haven’t exploited the potential I suspect or presume I have so it would be inappropriate for me to grow larger until I do (success and ready access to capital kills more businesses than the lack of it). At such time, were I to do so, veritable expansion (aka head count and infrastructure required of that) again would be driven by proceeds of the former. My point is, as a service provider, one derives revenue by the job; you don’t need much capital just your time as the client covers the costs of any subcontracted work.

Now if you are referring to augmenting your infrastructure (equipment, CAD, larger location to park it) as “expansion”, I can see you might need capital because these would permit you to expand the range of services you could provide internally. In the short term, I would recommend you (continue?) to subcontract to other businesses that can provide these services to clients. In my case, I don’t subcontract at all. I provide direct referrals to businesses I think are good and leave the client to manage the relationship. It’s a lot less hassle for me because I’m concrete and very task oriented; it’s difficult for me to quantify (and bill) for the abstract duties involved with relationship and project management. For clients who need more hand holding until they learn the ropes themselves, I refer them to esteemed colleagues who excel at these functions.

How do designers find backers?

I’m surprised this hasn’t come up in discussions with your clients. In my experience, most entrepreneurs are self financing and research bears this out. Very few secure angel investors or backers beyond immediate family or what a partner one may have brings into the venture.

The subjects you choose are always timely, interesting and on point. You always make me think, really think. As you said,
……”the cost of acquisition specific to the transaction itself. A transaction cost could be duty paid on imports or the time it takes you to research which products to buy or the cost of going to get them from the store or market”……

This is where I struggle; decisions, decisions. My cost per transaction is high; I am very research-based, and a control freak. There is too much information/choice out there. I can buy scissors for 5.90 at vendor x, but vendor xy has them for 6.10, but, has a better cost on something else I need. Simple though this example is, it goes on and on. Sometimes I end up buying at an increased cost because I trust them to deliver what I need in a timely manner. I don’t have to spend valuable time checking on the order, making follow up phone calls, etc.

My mom has always said, “do unto others as you would have them do unto you”. The Golden Rule. It is still a good one to live by; maybe more so in the future. If I want someone to trust me, I have to be trustworthy. If I am honest, I (hopefully) will be treated honestly.

Thanks for another great post.