How to know when it’s the right time to use a loan and invest in your company.
Running a profitable business involves routinely returning to square one to reevaluate its trajectory. Doing so can give you insight on your next steps to further success — and whether you’ll need more working capital to put those plans for growth in motion.
Here are nine smart ways that business financing can grow or improve your business venture:
Buy more inventory.
Customers won’t be thrilled if your supply of products can’t keep up with their demand. A backstock of inventory can ensure that your loyal consumers won’t end up shopping elsewhere.
Expand your business.
As your business needs increase, you’ll likely grow out of your first space. Business financing can help you move on up to a bigger office, expand your warehouse for growing inventory or make room for employees in other locations — all good problems to have.
Upgrade your equipment.
To keep up with increasing business, equipment upgrades are necessary for more efficient output. When you’re shopping for new equipment, weigh whether it’s a must for your business plan or just a want.
Build positive business credit.
If you started your business without the help of a loan, you’ll want to build a business credit history so that if you do need more financing down the road, you’ll be eligible for the lowest rates and most flexible terms.
Cover unexpected expenses.
Be it broken machines, much-needed renovations or a lull in business — emergency expenses can pop up. A business loan can bail you out of a sticky situation while keeping the wheels in motion to prevent profit loss.
Qualify for a lower interest rate.
If you’ve already taken out a business loan, you may not have gotten the interest rates you were hoping for the first time around. But responsible payments and an established business credit score can put you in a better position for more competitive rates. Even a small drop in interest could save you thousands in the long run.
Jump at a business opportunity.
The unexpected can be positive. Like the opportunity to land a commercial account that requires increased output or an unbeatable deal on a product when bought in bulk. A business loan can float your business with extra cash to take advantage of a productive opportunity.
But calculate the risks of taking on extra business or product so that you’re better positioned to end up in the green.
Hire and retain talent.
Who you hire is a direct investment in your business, and you’ll want to give your employees the resources they need to grow alongside you.
Employee trainings and competitive pay can prevent employee turnover. And more hands can prevent your current employees from spreading themselves too thin.
Advertise and promote yourself.
Depending on the type of business you have, word-of-mouth may not be enough to reach your potential customer base. Advertising and marketing is a smart investment that can help you pick up new business and a diverse clientele.