It's a great feeling to receive a small-business loan. It can open the door to new growth opportunities and keep you a step ahead of the competition. But you need to consider your long-term goals and immediate financial needs to be sure you are spending that money wisely. Here's how to put your business loan to good use.
1. Purchase new equipment
Many manufacturing, distribution, or R&D companies — as well as other businesses — can gain significant financial benefits from installing new equipment. For example, you might be able to offer new products, streamline your operations, or reduce your materials or labor costs.
2. Strengthen your online presence
A small-business loan could update an outdated website or add new e-commerce functions. You could also purchase advanced lead-tracking or customer relationship management (CRM) applications that generate new business from prospects and current customers.
3. Build brand awareness
A loan can also be used to expand current advertising, public relations, and other marketing efforts by hiring a dedicated staffer or working with an outside agency. A well-conceived branding program can increase customer awareness and lay the foundation for more sales in the future.
4. Launch a new product line
It takes money to develop a new product and bring it to market. Your customers may be asking for you to expand your current line, or your research may suggest an unmet market need. In any case, investing in a new product line can be an excellent way to take your business to a higher level.
5. Build up your inventory
Successful business owners know that they can't sell a product or service that's not in stock. Retailers, in particular, face a seasonal challenge of ordering enough merchandise in advance of busy seasonal periods. Service businesses know they need enough people to take care of their customers in a timely manner.
6. Enter a new market
Now may be the right time to open a new store, office, or warehouse in a new location. Or you might see an opportunity for your business to serve a new vertical market, such a healthcare, education, or government. A small-business loan can support your decision to enter a new market — an investment that can pay big dividends over time.
7. Renovate or expand your facility
Enlarging your office, modernizing your store, or adding customer-friendly amenities can help your business grow. This type of capital investment can be a great fit for your new loan.
8. Cover the 'growth gap'
Successful businesses recognize that there can be a delay of 30 days, 60 days, or even longer between selling a product or service and receiving payment. This can be a serious challenge for a growing company whose current spending is increasing so they can serve a larger customer base. A business loan can help cover this gap, allowing you to maintain your forward momentum without worrying about running into a cash crunch.
Whatever your decision, consider a business loan as an investment that will pay off in the future. As long as you focus on ways to increase your revenue and profitability, you'll be using the funds wisely.
This post is sponsored by Wells Fargo.