Want to level-up your strategies? Visit us at http://www.strategy-planning-group.com
Image Title: An Illustration of a Loan
Alt Image Title: An Illustration of Finding a Loan
Image Description: An illustration of two hands holding magnifying glasses and looking at a dollar and an idea bulb in the background
Are you planning to start a business? We know it’s a clichéd question, and you wouldn’t be here otherwise. What we are trying to confirm is that if you are looking for capital to finance your small business, you have hit the jackpot.
Before you start researching which business loan options you should go for, the more important thing to focus on is to know how much you need and how you’ll use it! You can find plenty of information online on the former. We are here to cover the latter subject. You also need to keep a few other things in mind, such as business insurance, taxes, and the due dates for BAS, but those are topics for another day.
The Importance of Getting a Business Loan
A business loan not only helps you set up your work but also keeps the operations running. Business owners use a loan for various reasons, like meeting short-term goals, boosting cash flow, and purchasing pricey but necessary equipment. Moreover, a business loan can also be used to consolidate your high interest debt.
Let’s look at the benefits of a business loan:
You Get Full Control Over Your Business
By contacting investors, you lose a part of your business. As a result, you are required to make shared decisions and only proceed with a project that receives the most votes. On the other hand, you will receive funding from your bank in a matter of weeks and sometimes even within 24 hours. Yes, a loan comes with a processing fee and interest rate; however, at least, you get all the profits to yourself.
Funding Is Fast
As mentioned above, a loan can be acquired pretty easily and fast. All you need is a good credit score and meet a few eligibility requirements, and you are good to go. As for raising funds through venture capitalists, the paperwork can take months.
Lower Interest Rates Than Credit Cards
Making business purchases on a credit card is not a sound decision. With a “Good” credit score, you can get a small business loan with an interest rate between 2% and 13%, whereas for credit cards, the range starts from 13.9%.
Now that you know how a business loan can assist you, we will move on to the “How to Use It” part of this blog post.
Make a Plan
You probably have a couple of objectives in mind on how you will achieve your goals. Well, they aren’t going anywhere if you don’t start working on them. For that to happen, you need to have a plan in place that needs to include the following things:
When it comes to a product, your main cause of concern is the inventory. You don’t want to stock too much so that you don’t get stuck with merchandise worth thousands of dollars if something goes wrong. Still, you don’t want to stock less, which will affect your sales.
Your inventory should be based on your target audience and the product’s popularity. Contact retails stores to find out if they hold a product that belongs to your niche.
As for service, you need to make sure you have qualified employees who understand the company mission, vision, and goals.
Even when your product is outsourced, as is the case for dropshipping businesses, you will still need basic office equipment. Since you are just starting, it makes sense to buy second-hand supplies and existing vehicles and machinery. This will allow you to invest your money in the area that matters the most: Marketing.
From the physical space that you are renting to the internet, gas, and utility bills, and more, don’t forget to add all these up. However, ultimately, they make the bulk of your expenses. You can add all such expenses in your taxes so they are mentioned in the report before the due dates for BAS.
Marketing is important to your business because it helps you build brand image and recall. Without marketing, you have don’t have a brand but an indistinguishable product that doesn’t stand a chance in the competitive landscape. By advertising your USP, you can show your target audience why they should buy your product or choose your service.
Hiring and Training
Most business owners think they don’t need to invest in their staff. Nowadays, it’s not hard to find a qualified person. What’s difficult is finding someone who can blend in with your office culture and work as a team member. Hire a person with the right credentials and then train them in becoming an asset to your company. You might need to take some steps like holding regular workshops and training classes so your employees are up-to-date with the latest trends and technology.
And this is why a business loan is a much better option for supporting your business’s goals and keeping operations running.