Natural Foods Merchandiser
9 ways to expand your business without a bank loan

9 ways to expand your business without a bank loan

With a little ingenuity, natural retailers can increase their inventory and their bottom line—all without a bank’s help. Here's how.

Financial advisor: Bill Hargis, Founder, president and CEO of beverage company Fruit 66 ( and adjunct professor of entrepreneurial finance at Virginia Commonwealth University, Richmond, Va.

  1. Get an extension from distributors.
    If you tell suppliers about your expansion plans, they may extend your credit terms. In other words, let’s say your store buys $200,000 a month in inventory from a distributor. If the distributor likes you and your development proposal is sound, the distributor will lengthen the payment term from, say, 30 days to 60 days. That frees up money in the short-term to reinvest in the business.
  2. Partner up.
    Network to find high-net-worth individuals —that is, rich people—who want to invest in local or retail businesses. Under this scenario, a retailer with a sensible plan gains money by selling a piece—but not a controlling portion—of his or her business. But remember to set up the partnership so that you can eventually purchase back the equity at a set price.
  3. Ask for a loan.
    Instead of selling equity to an investor, make it a loan. If wealthy people give money as equity, they don’t get it back for a long time. But if they grant a loan to a retailer, the interest is higher than what they’d make from money sitting in a savings account. It’s a win-win situation.

Grocery store designer: Dan Phillips, Project manager and designer of Phillips Enterprises (, Bellevue, Wash.

  1. Invest in taller-format refrigerators.
    At 88 inches high, these cases provide an extra shelf for products and are narrower, which increases aisle space. Each new remote refrigerated case can run between $5,000 and $8,000, and installation from $6,000 and $10,000. Refurbished cases, however, cost about 60 percent of new.
  2. Grow outdoors.
    If you’re bursting at the seams, buy outdoor fixtures for featuring products al fresco. Companies such as Creative Merchandising Systems ( offer weather-treated produce bins designed for outdoor use. They are on castors, which makes it easy to relocate and rearrange displays. You can also get bins with drain pans, so you can put iced products, such as beverages, outside.
  3. Prioritize and reorganize products.
    Look at your store layout, and analyze your inventory. See where you can consolidate to gain more space. For example, a lot of grocery stores have a housewares department filled with kitchen utensils. Get rid of this dedicated section, and instead cross-merchandise. Take the spatulas and hang them next to the pancake mix.

Retail consultant: Jeff Kaufman, Owner of Roots Market, Bark! Pawsitive Petfood and Great Sage Organic Green Cuisine, Clarksville and Olney, Md.

  1. Make a deal with your landlord.
    If you expand in your current shopping center, your landlord might be willing to lend you $20,000 or $30,000—if he or she believes a reasonable return will result. Landlords are often a good lending option because they are familiar with you, and they’re interested in keeping you successful. That said, only go to your landlord if you’re doing well and that’s why you need to grow.
  2. Go local.
    A local bank is more apt to get to know you and your business plans. The big banks might just run you through a formula. That system can work against you if your store is small and you don’t have collateral. Smaller banks tend to back smaller businesses.
  3. Plan well for the future.
    To do more with less, we’re fans of hiring an architect. It may seem like an extra expense, but we find it saves money to do proper planning up front. We’ve had many instances where the general contractor says he doesn’t understand something, which will cost another couple thousand dollars. That’s where the architect steps in and says, “No, I’m sorry, it was clearly on the plans.”


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