Google, one of the companies in Alphabet and the brand by which the organization is best known, is known for its lavish spending on “moonshot” projects. Like many businesses in Silicon Valley, it’s not afraid to take risks and make mistakes. But to be cavalier in your a
Over the last five years or so, Google has been spending big and not providing value for its investors. Take, for instance, the company’s foray into head mounted wearable devices – things like Google Glass, which was supposed to be the “natural successor” to the smartphone. At least, that is, according to company founder Sergey Brin. Glass, however, didn’t have a happy start. Despite the fact that it was launched by skydivers jumping out of a plane and the company spending millions on marketing, the devices never really took off. People just didn’t want to walk around looking like members of the Borg collective.
Glass was one of those examples where Silicon Valley let its own geekiness get the better of it. A quick market survey would have revealed that Glass would be a flop from the start – in its present bulky form – but Google pushed on anyway, believing it was creating the future, just as Apple thought it was with the original smart phone. But Google was able to make the mistake. Even though it lost more than $3.6 billion in unproductive side projects in 2015 alone, the company still believes that it is doing the right thing by pursuing these exotic projects. It’s up to companies like Google, its executives believe, to innovate and move the world forward.
Of course, having a lot of money in the bank has allowed Google to make its crazy investment decisions. Being the second most valuable company in the world, packed to the rafters with cash and investor funds means that even if it does make mistakes, these mistakes aren’t catastrophic.
Small businesses might imagine that they can’t do what Google does because they don’t have any cash in their firm – they’re not even public. But that’s simply not true, especially for companies that have accumulated a lot of productive capital. There’s often a lot more money in their businesses than they realize. You can visit Equifyllc.com/equifyfinancial for details on this. Suffice to say, that most companies have a lot more money locked up in them than many entrepreneurs realize.
Does that mean you should be taking risks like Google does? Probably not. Google has the advantage of being the dominant player in a network: it’s online advertising network. Networks, thanks to their interconnectedness, allow businesses to behave differently and help to generate enormous profits. Google isn’t about to be dislodged by a competitor because it’s created a system of interdependent people, all of whom rely on everybody else in the network. They’re not about to go elsewhere, even if Google’s services ultimately become shoddy.
Here are some of the ways your business is made of money, just like Google.
You Have Intellectual Capital
Google works in close cooperation with the government on a lot of side projects. As a result, it gets a lot of funding from Federal agencies to carry out work on their behalf. But public-private partnerships aren’t just limited to big companies like Google: the government is always looking to invest in promising companies, especially those that conduct groundbreaking research.
The companies most likely to receive grants are those with a lot of intellectual capital. If you work at a biotech, nanotech or small engineering firm, you might be eligible for one of these grants. What’s more, they’re not just handed out by the federal government. Grants and loans are available at the city and state level too according to inc.com. Cities are usually desperate to attract startups and generate local business hubs because they want to provide jobs to their citizens.
You’re Profitable In The Long Term
If you’re profitable in the long term, there are all kinds of options available to your to get your hands on cash. Even if you don’t have a huge amount sitting in the bank, your future profitability makes it more likely that you’ll be granted money in the present.
It’s good practice to seek out credit lines, even if you never intend to use them. Lines of credit are essential if you should encounter cash flow problems or suddenly need to reorganize your company because of competitor disruption. So long as you can make a case for long-term profitability, lenders are usually more than willing to dole out money and provide your company with the boost it needs for its investment projects.
You’ve Got Plenty Of Capital Already
Even if you are cash-poor, you could be capital-rich. Does your company own a factory? Does it own lots of vehicles? Does it own expensive equipment that it uses to make its products? If so, you might not be as cash-starved as you think. Lenders love it when companies have a lot of capital. Google, for instance, is able to borrow a lot of money because of all the offices and servers it owns, not to mention it’s online digital capital.
Businesses with lots of capital can use it as a base for borrowing more. Just like you might lever up your borrowing if you own a private car or home, entrepreneurs can do the same with their businesses, expanding them at a faster rate by borrowing against the value of their assets.
To keep as much equity in your business as possible, set up key milestones. You want to know exactly when it’s worth giving up equity in return for growth, and when it’s not.
Once you’ve been fully vetted, it’s not long before offers of capital start rolling in. If you’re an innovative company, don’t be surprised if somebody offers to buy you out. And remember, your company probably has a lot more value than you give it credit.