So you have been approved for a loan and you are now itching to use this fresh injection of cash to take things to the next level. So where do you start? Before you jump feet first and begin spending with abandon, seriously consider what your overall business goals are. Doing so will keep you disciplined and focused on only directing funds where you need it most.
One of the primary goals of any business in existence is growth. Ask yourself where this much-needed influx of cash can be used to facilitate expansion. What investments can you make that will guarantee you a Return on Investment (ROI)?
Unfortunately, if you don’t take the time to analyze your goals and come up with an effective strategy, you may find yourself having to take out more loans in the future.
Here Are 5 Ways That You Can Spend Your Loan
- Buying Inventory
Once you secure your small business loan, you are now in the position to restock your current inventory, or to buy completely new stock. This way, you will be equipped to meet your customers’ needs, fulfill orders during peak shopping periods, and stay on top of your competition.
- Purchasing Equipment
Buying new equipment is intimidating, especially with the hefty price tag. However, your small business loan has made this more attainable to make it a reality. Being able to replace an existing machine or upgrade to a more advanced model could improve efficiency and production, thereby promoting expansion.
- Investing in Marketing
Potential customers will not know you exist if you don’t market yourself. The lifeblood of your business is entirely based upon attracting new customers and keeping your existing ones. Therefore, you need to have a marketing strategy in place to implement and always improve over time. Your small business loan could pay for new systems like a new website, hire a new sales force, or a new copywriter, etc. Investing in marketing is always a great move that will spread awareness and generate more sales.
- Taking Care of Your Operational Costs
One thing that is guaranteed in business is change. Change can come as an abrupt slow-down in sales, unexpected expenses like a machine breakdown, or inclement weather damaging your building, these are all likely to happen and take you by surprise. Regardless of what surprises may happen, you still have to take care of your everyday, operating expenses. You still have to pay your electric bill, pay your staff, and pay the lease on your building. This business loan will be a great cushion while you weather the sometimes choppy waters of operating a business.
- Establish Your Credit
Taking out a small business loan is an excellent way to establish and prove your “credit-worthiness” in the eyes of “traditional finance companies”. Use this opportunity to always pay your loan on time. Use your loan to do whatever it takes to increase your profits. This will establish you as an attractive borrower in the future for other lenders. Over time, you will see that the cost of funding your business will get dramatically lower.
Sound Use Of Funds Will Pay You Back
Funding for your small business is a welcome relief and protection against the peaks and valleys of your business. Having a strategy will keep you focused on using the funds wisely. Be diligent in paying back your loans on time, this will open doors to more funding with better terms, in the future.