Every businesses aims to stay financially independent throughout their journey. However, it is not always easy. Business loans can help your business grow without having to deal with serious financial constrains. Let’s explore some tips to utilise business loans for success.
1 – Remember, not all debt is bad
People often think that debt must be avoided at all costs. Whilst we would always recommend borrowing responsibly, it is worth remembering that debt can be used to your advantage to help preserve working capital, or support investment in assets or properties that will ultimately help grow your business and make it profitable. Most of the biggest businesses in the world have used debt sensibly to secure and maintain a competitive edge.
2 – Don’t Just Depend on Big Banks for Finance
There are many different avenues that you can go down in order to secure finance for your business. It is often tempting to think that the best rates and deals lie with the big lending banks and price comparison sites. Larger lenders tend to have rigid lending criteria, which means that SMEs sometimes struggle to get the best rates.
It is always better to rely on business finance brokers like Funding Guru for business loans. Brokers understand the lending market and know which lenders are most suitable in each individual borrowers situation, ultimately saving you time and helping you grow your business faster!
As well as being a broker Funding Guru is also a lender for unsecured business loans – offering our clients the best of both worlds! There are many niche lenders like us who have specific financial expertism. For example, when looking for finance for an equipment purchase, there are many lenders who specialise in only funding certain types of assets and therefore understand them so well that they are quicker and cheaper to deal with than the mainstream banks.
3 – Keep a Strong Hold on Your Expenditure
It may sound simple, but it’s amazing how easy it is to reduce waste and streamline processes in your business to massively reduce your outgoings. Tips include introducing a paperless office, setting printers to only print on double sided paper, and avoiding colour printing and copying for internal documents. If you have staff out on the road, can this be done over the phone instead?
4 – Set a Budget and Stick to It
Setting a budget is easy, but sticking to it can sometimes be harder than you think. Try to plan a realistic budget for the financial year, and build enough of a reserve to give you some protection against the unexpected. It is definitely worth investing in accounting software to help you keep track of your business finances, and help you understand your financing needs more clearly.
5 – Recruit On Self- Employed Basis
As your business grows you may feel it is time to take on new staff. However, hiring and training costs can make this an unappealing prospect. WConsider hiring additional staff on a self-employment basis. Also, make any new positions permanent at a later stage when you they prove to be fit.
6 – Don’t Wait to Get Paid
What is the value of your unpaid invoices? Imagine the sort of cash injection you could put into your business if you were able to cash in on your unpaid invoices straight away? You can get all these benefits by availing invoice finance.
So why not consider factoring? It can give you and immediate cash payment of up to 90% of the value of your invoices, and our lenders will even handle the credit control process for you, meaning you can further reduce your admin costs. Alternatively, you might want to consider Invoice Discounting, which works in a similar way to Factoring, but allows you to manage your own credit control process.
7 – Communicate with your clients
Maintaining active communication with your clients is vital. The better your communication with them the less likely they are to forget you when it comes to settling their invoice! Also, you may want to consider offering incentives for prompt or early payment e.g. a 5% discount where invoices are settled within 7 days.
If you’re considering for a business loan whether for your start up or an established business, request a call back from us to chat about your options with no obligation!
