Tuesday, November 7th, 2017
When you’re in business, getting a competitive edge can mean the difference between success and failure.
But without the cash you need to invest in important business-building action, it’s easy to flounder.
To help you take positive steps that lead to genuine growth for your business, look at these reasons a loan might be just the business boost you need.
If your office cubicles are filled to capacity and you need to hire more staff than you have space to house, it’s hard to keep your business growing smoothly.
Or, perhaps you run a warehouse-based business that is bursting at the seams with all the stock you need to have on-hand to meet your orders and a larger space is the only positive way to grow your operation.
Maybe you operate a cafe or restaurant and your growing reputation means that you have more customers that seating space.
Look at the positives, rather than the negatives – this means you’re doing something right!
But just because your business is ripe for expansion, you might not have the cash-flow you need to make it happen when you need it to. To help finance your big move, a loan might be the cash injection you need for sustainable, long-term growth.
To help you access money you’ll need to secure a new, bigger premises – and fit it out to suit your brand – talking to a finance broker about the best loan to suit your needs is a smart first step.
Taking on any finance is a serious matter so talk with your accountant and do a budget. Loan costs add another expense to your business and you still need to make a profit to be viable. If the service or product you offer relies on clients and customers actually coming to you, do your research to see if parking and other local infrastructure is a good fit for your needs. You don’t want to trap yourself into hefty loan repayments in a location that doesn’t work.
If you have your eye on bigger business growth and can foresee your need for large-scale finance in years to come, establishing a positive credit rating for your business by taking on a small loan, then repaying it perfectly can be good for your reputation.
Businesses that are young can often have some challenges qualifying for large loans, so, by building a great credit history, you make it easier to apply for other credit in the future.
Lots of businesses rely on equipment to operate successfully. Depending on your industry, that might mean manufacturing machinery or vehicles, or it might simply mean desks, computers and other office furniture to create a welcoming and comfortable space for your employees and clients.
If you take out equipment financing, the equipment itself can act as collateral for the loan, so the risk is lower.
It still pays to be prudent. Talk with your accountant to separate your actual needs from an expensive wish-list of equipment. Yes, your employees need comfortable office chairs to sit on. Do they really need that room filled with video gaming equipment and professional standard table tennis tables? Maybe not…
Inventory can be one of the biggest expenses for retail businesses.
And if cash-flow is tight an inability to buy enough stock to keep up with demand can slow you down.
If your business relies on seasonal triggers, it means you need to outlay for stock in the off-season, then wait for the peak season to see the return on your investment.
This is where a loan or perhaps Debtor or Invoice Finance can help. Always talk with your accountant to ensure you can meet the repayments and weigh up how much you need to borrow to get you going.
By creating a sales projection based on last year’s figures, you’re off to a sensible start.
It’s important to remember that sales figures can vary from year to year so it is always smart to be conservative – just to be safe.
Sometimes, a perfect opportunity lands in your lap – and to make it happen, you need to jump in, with ready cash-flow.
Get a second (and third) opinion from financial experts you trust and do your sums carefully before you commit to over-stretching yourself with high finance and no certainty for success.
Some risks are calculated. For example, perhaps you run a business and you win an important commercial contract that’s worth thousands but you need a particular piece of equipment to make it happen.
In a case like that, if the profits you can make from the cash injection are bigger than any loan repayments over the life of the loan, it’s a good move. Always crunch the numbers. They tell a much clearer story than mere ‘instinct’. Remember – although it’s true that going into debt for your business is not something to take lightly, applying for finance that can help you achieve greater business growth might be the best thing you can do for long-term business success.