Start up Business Finance is the first step to take if your business is ready to take the leap, but you don’t have the working capital to do so.
If you’re ready to expand your physical location, it means business is booming. You’ve either outgrown your initial office location; or your restaurant or store have more customers in and out than you can fit inside your space. You may need a term loan to finance your big move. Whether it’s adding an additional location or packing up and moving, the up-front cost and change in overhead will be significant. Use a revenue forecast along with your existing balance sheet to see how the move would impact your bottom line. If you’re talking about a second restaurant or store, research the area in which you want to set up shop to make sure it’s a good fit for your target market.
If you’re planning to apply for larger-scale financing for your business in the next few years, the case can be made for starting with a smaller, short-term loan in order to build your business credit. Start-ups often have a hard time qualifying for larger loans if both the business and owners don’t have a strong credit history to report. Taking out a smaller loan and making regular on-time payments will build your business’ credit for the future. This tactic may also help you build relationships with a specific lender, giving you a connection to go to when you’re ready for that bigger loan. Even one late payment on your smaller loan could make your future chances of qualifying for future funding even worse than if you’d never applied for the small loan at all.
Purchasing equipment includes financing certain machinery, IT equipment, or other tools to make your product or perform your service. If you take out equipment financing, the equipment itself can often serve as collateral for a loan.
Inventory is one of the biggest expenses for any business. You need to keep up with demand by replenishing your inventory with plentiful and high-quality options. Especially if you have a seasonal business, there are times when you need to purchase a large amount of inventory without the cash on hand to do so. Slow seasons precede holiday seasons or tourist seasons, necessitating a loan to purchase the inventory before making a profit off of it. In order to measure whether this would be a wise financial move for your business, create a sales projection based on past years’ sales around that same time. Calculate the cost of the debt and compare that number to your total projected sales to determine whether taking an inventory loan is a wise financial move. Keep in mind sales figures can vary widely from year to year so be conservative and consider multiple years of sales figures in your projection.
When working at a startup, you wear a lot of hats. There comes a time when doing the bookkeeping, fundraising, marketing customer service may start to wear on you and your business. If your small team is doing too many things, something will eventually fall through the cracks and compromise your business model. Some businesses choose to invest their money in their talent, believing that this is one way to keep their business innovative and competitive. There must be a clear connection between the hiring decision and an increase in revenue; but if having an extra set of hands around helps you focus on the big picture, that alone may be worth the loan cost.
Contact us for assistance with obtaining start up business finance for your company.