How to Structure Capital for Growth Without Killing Profitability

Growth is exciting - but if your capital structure isn't built right, it can quietly erode your margins and leave you with a bloated business and stressed-out balance sheet.

The Common Trap

Many businesses raise capital too quickly, too expensively, or in the wrong form. They chase scale with high interest debt or premature equity dilution - all without a clear view of return on invested capital (ROIC). The result? Revenue may grow but profitability stalls or disappears.

A Smarter Strategy

Here's how to grow strategically:

• Match the capital type to the growth phase: Use equity for long-term bets, debt for predictable, cash- generating investments.
• Layer your capital stack: Blend term loans, mezzanine debt, or seller financing to preserve equity while keeping payments manageable.
• Forecast profitability first- Always model how each dollar of capital impacts your net margin and EBITDA - not just top-line growth.

Bottom Line

Growth Capital should be fuel, not fire. Structure it to enhance, not erode, profitability, or you'll find yourself running a bigger, poorer business.

Need help structuring your next raise? Our team can guide you.