Small Business Tips
Knowing When Your Business is Ready for Financing
A recent post by Inc. highlights eight signs that it might be time for your business to take on a loan or find investors. Near the top of their list is employees no longer being able to keep up with their workload. Staffing is a huge expense for many businesses and so many entrepreneurs try to keep their payroll as barebones as possible for as long as they can. It’s a good strategy but as your company grows it’s important to increase hiring not only for the moral of your staff but also for the sake of customer service and efficiency. In this case it’s well worth spending some money to ensure you’re not stifling your business’ growth.
Another sign it’s time to look into finance is if you’re working with outdated technology or malfunctioning equipment. Anyone who’s ever watched an episode of CNBC’s The Profit knows that, while it may save cash in the short run, working with inefficient equipment is a waste of time and money overall. Utilizing a small business loan or line of credit to purchase what you and your employees need in order to do your jobs is a no-brainer. Doing so will increase productivity and avoid a complete stoppage of your business should your old equipment finally give out.
Speaking of reality TV, one of the top ways to get an investment on Shark Tank is to inform the moguls that their money will be used to finance a large order that can’t be fulfilled otherwise. Likewise if you’re unable to complete a large order due to lack of capital, it could be very well worth it to take out a loan. Aside from the money you stand to make from the sale, it’s important to consider that a customer of that size likely has the clout to get you more business should the transaction go well. Turning away customers because of short term cash flow issues is bad business.
Growing your small business requires hard work, planning, and opportunity. Unfortunately some entrepreneurs will waste some of the opportunities they’re provided simply because they don’t want to take on any debt or sell any of their company to investors. With the growing availability of small business loans and other options including equity crowdfunding, business owners should think carefully about whether their short-term concerns could hurt the long-term prospects of the company. Looking out for some of these signs that you’re ready for some form of financing and making the right call could make a huge difference in the future success of your small business.