How you can use a business loan effectively

A business loan can offer you the opportunity to grow your business further. An investment in your company does bring a financial picture. If you ensure in advance that the investment is used as effectively as possible, this will be of great value to the return of your company. How are you doing this?    

Make sure you have a plan. 

A business loan provides opportunities to grow and expand the business. Take a good look at why the investment is required and make a plan for this. This increases your chances of success.  

Here are some effective ways businesses use external financing: 

1. Stock 

In the quietest months of the year, stocking up on supplies may not be your priority. However, this may be a good time to think about your inventory planning in preparation for peak season. It is precisely this period that offers opportunities. Do you order supplies abroad? Maybe you can make fixed agreements with suppliers for upcoming orders. Are the products not necessarily trend sensitive? Order them a few months earlier than the competition, perhaps at a nice volume discount.  

2. Planning your staff

During the rush around the holidays, you may have had to hire extra staff. The relatively quiet months then literally and figuratively give you a break and are perfect for making a strategic plan for managing your workforce in the busier months. The holiday allowance will be paid out again in May and this is a considerable expense for many entrepreneurs. Thinking about how you want to manage such expenses certainly can’t hurt! 

3. Inventory  

Do you have wishes for conversion, renovation, or extension? Would you like to create a new inventory, replace the wallpaper, or neatly hide the wiring? For example, look at the holiday periods of your staff. These can be good times to make changes. Make use of it!  

 4. Bridge financing  

There will always be costs to keep the business running, and the peak season is less than twelve months for most entrepreneurs. Perhaps a quarter is disappointing, and you have a few months to bridge to keep your cash flow going. You can then choose to expand your working capital for a few months by requesting additional working capital.  

 5. Marketing and advertising 

We are increasingly working online. A website and an online marketing campaign can be very useful for attracting customers on a larger scale.  

When looking for the right financing, look carefully at the conditions. Especially if you are looking for a bridging loan, you may not need the financing for the entire term. Paying back the loan early can save you money. You can repay your loan early, without having to pay extra costs.  

Getting the best out of the loan 

Keeping an eye on your company’s finances and making sure that the loan is used wisely and effectively will help you avoid common mistakes in business expenses: 

Keep your business loan separate from your current account. Transfer money if necessary. This adds extra consideration when making purchases and makes it more difficult to spend impulsively. An unwanted scenario is that the expenditure increases, whereby you mainly spend the loan on daily expenses, this decreases your liquidity to make large investments. 

Think about each planned expense and compare it with your business goals. Stick to a budget so you know where the money is going. Extra financing is a great opportunity to take your company to a higher level if you use it correctly. 

Maintain a good relationship with the financier. Staying in touch with your financier and ensuring that you pay your monthly interest and repayments properly ensures a good relationship.  

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