Answer: It's difficult, but as the Navarros have taught us, it is possible.

Capital is required in a business to fund 4 things:

• Inventory, having goods available for sale.
• Receivables, carrying amounts owed to you by your customers.
• Capital investments, such as computers, equipment and furniture.
• Operating expenses, salaries and overhead expenses.

Let's look at these in terms of Navarro Pharmacy. They certainly needed inventory to stock their shelves. Fortunately, since they operate in a "cash and carry" business, they needed no financing for receivables. In the area of capital investments, as well, they were fortunate to have minimal needs.

A manufacturer, for example, would have a much more significant need of capital in this area. Finally, they minimized their operating expenses by minimizing their own salaries, plowing the earnings of the business back into the business to fund its expansion.

Topic for discussion: Can any business accomplish what the Navarro's accomplished in funding the company's expansion with capital generated by the business?

Answer: The requirement for external conventional (bank) or equity (additional owners) financing to realize your business plan will vary based on the nature of your business and the speed with which you want to expand.

Topic for Discussion: What's the best route to fund expansion?

Answer: The most expensive route is the equity route, where you actually yield part ownership in your company and generally some control to a Board of Directors. If you are in the business of cancer research, this is most likely your only option. The least expensive route is organic growth, where you reinvest the profits of the company in the company to fund its growth. This method is effective if growth does not require an inordinate amount of capital and if the pace of organic growth is acceptable to you.

The vast majority of businesses choose the road in the middle of conventional bank financing where inventory and receivables are supported with lines of credit, providing working capital to the business, and long term assets, such as buildings and equipment, are financed with long term debt. You'll have to decide what is best for you.

You think about it: Have you explored funding sources? Banks that told you, "No" at your startup will probably tell you, "Yes" if you have a solid growth strategy.