A lot of SME owners already know the benefits of getting the right loan at the right time for their businesses, but often times you find some who – maybe as a result of ill-advice or misinformation – are scared of the ‘trouble/risk’ involved, and a few others who say their businesses don’t ‘need’ a loan. Even Africa’s richest billionaire takes loans, because the greatest business people know that the best way to grow a business is with OPM – Other People’s Money.
So if you are still sitting on the fence about whether your business needs financing, here are 4 reasons it might:
This has to be the most obvious reason, due to the fact that the business world is fast paced and if you’re standing in the middle of the road, you had better be an ‘armor tank’ or you will get run over. Even customers don’t want to come to a business place that is not improving or redecorating. When your business place starts to look over-crowded all the time, celebrate because that means you are having more customers, but when these customers start to wait longer to get attended to, they will start to look to other ‘spacier’ options with faster turn-around time. So that would be a perfect time to renovate and open up space, or even open up a new outlet altogether to be in control of the traffic.
When seeking financing for this purpose, it would be wise to take one which can easily be repaid from the income from the already-existing business, as naturally it would take some time to see returns from a new outlet.
Ever gone back a third time to a shop that didn’t have the product you needed the first two times? I’m guessing the answer is NO. That’s how it is in reality; no customer wants to take the risk of wasting time to go into a shop that is always out of the right stock. So when your shelves start looking empty, or filled with only ‘old stock’, it might be a good time to take a loan before all your customers leave you alone, pun intended. Depending on your type of business, it may also be wiser to buy inventory in bulk to get lower unit costs, and for this you may need some extra funds.
When applying for such a loan, take into account the rotation of your stock from cost of goods sold and current assets, to help you evaluate the best repayment options for the loan.
3. Building Credit History
When you apply for a job at a company, the higher the position, the more experience is required. It is the same with loans – the better the credit history, the higher the amount obtainable. Sometimes you find business owners who get miffed when a bank or financial institution approves an amount “too low for their standard”, and scoff when the institution tells them that they would get more next time. I know it sounds like the same old story to you but it is true; financial institutions take calculated risks, and will only trust you with more money when they see you have a history of paying back without hassles, especially now that all credit history can be traced through credit bureaus like CRC and CRS.
Do not wait till you need a huge sum only to be disappointed; take small loans till you can qualify for the loans you need.
Much like Expansion and Inventory, having up-to-date, working equipment might be key to taking your business to the next level. Ever returned to a club whose bathroom couldn’t flush after doing an impromptu ‘number two’? NO! Or would your kids rather go the mall with outdated games, or one with the latest tech? Customers like to associate with the latest technology and would generally patronize businesses that satisfy that desire.
Be sure to test equipment bought with such loans before they paid for, get a warranty on the equipment if possible and estimate the effect of such an equipment on your income, so as not to end up using repayment money on repairs of a bad equipment.
So in the end, even though not every reason is a good reason to take a loan, there are some reasons worth considering when you want to make you business more competitive in the industry. And finally, before taking any financing, be sure your business can afford to repay.
The right funds can make all the difference – Get Flex Advance today!