May 4, 2022

How to scale your service business with Pipe

When your service business is growing, you want to build on the momentum. But even if you have money coming in, you’ll need enough of it up front to invest in scaling your business. It’s important to know your financing options so you can ramp up your marketing and sales efforts, expand your services, or grow your team at the right time.

Until recently, service business owners looking to raise capital for growth had two primary options—selling equity or taking on a loan. But if you have predictable recurring revenue, you have another option—trading your recurring revenue streams on Pipe’s platform for non-dilutive capital.

Putting your recurring revenue to work

In the past, financing has often either been collateralized by physical assets or has carried higher costs to match the perceived risks. But recurring revenue—whether through retainers, contracts, memberships, rent, management fees, or beyond—is emerging as a new asset class in our modern economy.

How come? Advancements in technology. Secure live data connections allow Pipe’s algorithms to analyze your revenue streams and the health of your business in real time, making financing much more efficient without cutting corners.

Whether your future recurring revenue is slated to come in next month, next quarter, or next year, it’s a bona fide asset. And you can trade that asset on the Pipe platform for up-front access to capital—your capital—within 24 hours of signing up for Pipe and fully connecting your accounts.

Scaling your service business without giving it away

Starting and running a business is full of challenges. While you need capital to grow, and raising a funding round can be an effective way to get that capital, it can also be a distraction that lasts months. Sometimes, it might even feel like a full-time job—especially if you consider the time it takes to warm up relationships, build a network, and constantly pitch.

On top of diverting your attention from building your business, selling equity in your company dilutes your ownership. This can absolutely be worth it at certain stages, but it’s a strategic decision to make with thought and care, not just by default.

If you’re looking to grow or scale up your service business, Pipe offers a fast, flexible alternative so you grow on your terms—without giving up unnecessary equity.

How service businesses use Pipe

From property management to recruiting, accounting to consulting, landscaping to IT and fitness centers, we’ve seen all sorts of service businesses tap into non-dilutive financing through Pipe—and they’ve used that capital in all sorts of ways to grow their businesses.

Let’s dig into three popular use cases for service businesses on Pipe.

Fund customer acquisition with non-dilutive growth capital

For many (if not most) businesses, sales and marketing are key components to acquiring new customers. Typically, investments in those categories are also predictable, making it easy to measure and prove ROI. That’s why many service businesses skip the loan, reserve their precious equity dollars [for the big stuff], and use Pipe to invest in things like hiring and training salespeople, scaling ad spend, and launching more marketing campaigns.

Pipe capital to develop your service

Your customers might never even know Pipe exists—but they will notice things like a superior service or upgraded facility.

Many service businesses use the recurring revenue they pull forward on Pipe to level up the experiences the business provides. For example, you can scale faster by hiring employees who can improve or expand your services, such as a customer service rep or an operations consultant. Or you could use Pipe to upgrade your tech stack—for example, paying for a more robust CRM system with AI capabilities. Some companies even Pipe their recurring revenue to improve the quality of facilities or offices by renovating or adding more equipment and amenities.

Access alternative financing for mergers & acquisitions

Mergers & acquisitions (M&A) can be a powerful way to expand your offerings, improve your services, and gain new customers. M&A can also be a way to achieve economies of scale. We’ve seen service businesses make the most of these opportunities by using Pipe as a quick, flexible funding source for strategic mergers and acquisitions. (One D2C founder even leveraged Pipe to close an acquisition deal with a tight deadline in 72 hours!)

Does Pipe replace loans and equity financing?

While some companies use Pipe as their only financing tool, it doesn’t have to be the be-all and end-all. Every company is different, and Pipe can be layered into your ideal capital stack in whatever way works best for you.

When you’re at a stage in your company’s journey where your ARR is under $100K, it might not yet be time to Pipe. (Equity or loans can be great tools at that stage!) But once you’ve got service-market fit and a rinse-and-repeatable growth strategy, Pipe could be just what the doctor ordered if you want to finance growth without taking on more dilution or getting stuck with restrictive covenants and warrants.

In other words? Think of Pipe as part of a toolkit that you can use strategically to grow your company on your terms.

NASDAQ is for equity. And now there’s Pipe for recurring revenue.

So we know Pipe can help service businesses with hiring more employees, financing M&A deals, and improving customer experience—but let’s take a step back. How exactly does it all work? As the world’s first trading platform for recurring revenue, Pipe allows you to trade your predictable recurring revenue streams for up-front capital to scale your business.

And it’s easy to get started. Just sign up and securely connect your banking and accounting systems so Pipe’s algorithm can analyze the health of your business. Once you’re connected and approved, you’ll unlock a trading limit and bid price (typically .93-.98 on the dollar) so you know exactly how much capital you can access and what your cost of capital will be. When you’re ready, click the “Trade Now” button, and you’ll see money in your account within a day. It’s fast, flexible, and transparent.

Find out your Pipe trading limit

Pipe offers a new option for accessing financing your business as you scale. Sign up, get connected, and see how much you qualify for today.

Learn more about how Pipe works for Service Businesses.

Disclaimer: Pipe and its affiliates don't provide financial, tax, legal, or accounting advice. What you're reading has been prepared for knowledge-sharing and informational purposes only. Please consult your financial and legal advisors to determine what transactions and decisions are right for you and your business.