Lots of business owners make the mistake of overspending when they first receive their business finance. The initial excitement makes it tempting to spend the funds on this and that without paying any real attention to where the money is going.
The trouble with this is you could easily spend the funds on things that don’t increase profitability or cut costs.
But the last thing you want is to waste your business loan — you want the money to go the distance and take your business to the next level. So here are six ways to make the most of your small business loan.
1. Have a Business Plan in Place
Before you apply for business finance, you should create a thorough business plan. Business finance providers will often want to see you have a plan in place when you apply for a loan. But having a business plan that details how you want to grow will also help to keep you on track when you receive your finance.
A plan will give you clear goals to work towards, and with ways to grow your business already laid out, you won’t be tempted to spend the loan on anything else.
2. Buy Any Necessary Equipment
Equipment can be a big one-time expense — especially if you work with large machinery or complex technology in your industry. But often, having the right tools can boost productivity and profitability. Up-to-date equipment can save time or make processes more efficient, and usually costs less to run too.
But upgrading equipment can be costly and might require more money than the business can afford. So when your loan comes through, why not invest in equipment which you know will help your business thrive?
3. Boost Your Marketing Efforts
Business growth requires more customers, and the best way to get more customers is to boost marketing efforts. Whether you want to increase your online presence with digital marketing campaigns, fund advertisements, or consult marketing/PR experts, your loan can be the perfect way to fund campaigns. You’ll attract more potential customers — and with more customers come more sales!
4. Place Orders in Bulk
If your business involves ordering products or equipment, you’ve probably noticed it’s cheaper to buy in bulk. When ordering more items, you pay a lower price per item than you would when placing a smaller order.
So a simple way to use your business loan to save money is to place any of your usual orders but in bulk. Don’t play with fire and order thousands of a product you haven’t sold before. But if there’s anything you know you need or anything you know sells well — go for it. As well as a standard business loan, you can also use order financing to cover large orders.
5. Increase Your Range of Products
One of the best ways to grow your business is to try out new products or services. Increasing your range of products means you can keep up with customer demand. And by offering more to your customers, you’re more likely to become a “go-to” business in your industry.
However, there is some risk involved in trying out new products — so make sure you thoroughly research the market demand for anything you’re tempted to try. You could also use a survey to ask your customers what else they’d like to see you offer.
6. Consider Expanding to New Locations
If your business is thriving in your current location(s), perhaps the best next step is to take your business further afield. A new branch in a different place allows you to reach new customers, improve brand exposure and increase revenue.
But setting up shop in another location requires funds. You’ll need to pay for commercial property rental, new staff, and new product stock. So if you’ve just received your business finance, this could be a good way to fund your business expansion.
Before you decide to expand, though, you need to ensure your business is ready to take the next step. Expansion is a good idea for businesses which have almost too many customers. So, if your business is booming and profits are regular and reliable, expansion could be a natural next step which makes the most of your business loan.