Let’s face it. Everyone wants to grow their business but people wonder about the pros and cons of taking on debt.
Most business owners look at obtaining a small business loan as a necessary evil. They do it because it’s necessary, but no one likes to incur a debt if they don’t have to. However, taking a business loan may be the key to unlocking the potential of your ideas.
In fact, the most common use of proceeds from business loans are usually allocated toward cash-flow. And although staying ahead of accounts receivables and paying your bills is a necessary part of running a successful business, it’s more about survival and maintenance rather than growth.
But all too often entrepreneurs overlook the many opportunities for growing their business by using “other people’s money”. Leveraging capital, makes dollars and sense when done properly. And it’s a proven method that successful business moguls have used throughout history to build their empires.
Here are 6 great examples of how to use a business loan to substantially increase your profits.
Marketing – Advertising – Lead Generation
There is probably no other single area of investment you can make in your business, that has the potential to increase your profitability as quickly and dramatically as marketing and advertising.
That being said, there a variety of ways to market and advertise your business to create leads and sales, but not every way will work for your particular business model. Choosing the most effective method of market penetration is crucial to your bottom line.
Below are several proven methods to generate more sales and profits from your marketing efforts:
Paid traffic to your website (Google AdWords, Facebook, LinkedIn etc.). Unless you possess the expertise to handle a paid advertising campaign yourself, it’s usually prudent to outsource the management of your campaign to a professional. The most attractive aspect of this type of advertising is that it has the potential to result in a substantial increase in revenue, and to do so very quickly.
Creating a quality website is the first step. The site should include every component necessary to compel a site visitor (potential customer) to engage in some way. That process will in turn create leads or sales. When done properly, it will also create a database of customers that you can market to in the future.
Search Engine Optimization means optimizing your website to show in organic search results on search engines like Google or Bing, when potential buyers of your products and services search for those products online. The higher up your listing appears in the search results, the greater amount of traffic (site visitors) that will likely come to your site.
Direct mail isn’t nearly as effective as it once was, but can still be effective with a targeted mailing list and quality marketing efforts. Research what successful competitors are doing in your space, modify slightly and make sure to use a quality list that allows you to target your best potential market.
Pay Per Lead
This business model can be a highly effective and low-cost strategy to generate new business. The key is finding a quality provider that can produce exclusive leads and consistent results at a reasonable price.
In a best-case scenario, you will already be capturing your current and past client base’s email addresses. If not, there are lead companies that can supply targeted email lists to market to.
Inventory Pricing Discounts
Regardless of whether you’re an ecommerce business, a retailer, or any other type of business that carries inventory, maintaining adequate inventory levels is crucial to retaining and gaining market share. Maintaining optimum inventory levels is even more important if you offer seasonal items that comprise a great deal of your annual sales.
Additionally, there are times that excellent buying opportunities present themselves from a vendor. They may take the form of a special discounted price on a specific product, or an overall discount based upon total dollars spent on an order, resulting in significant savings. In these cases, inventory financing is essential.
Without the working capital necessary to make those purchases, you lose that opportunity to make an increased profit margin on those products.
Liquidation Pricing Opportunities
Less competition is always good. But it’s especially good when you can take advantage of a competitors “going out of business” sale!
Regardless of whether you need inventory, vehicles, tools or equipment, your competitor will usually have what you need at a deep discount.
But be aware that these types of sales usually occur without a lot of notice, and chances are high that you’ll have to move quickly. If that’s the case, Mulligan Funding is here to help. Fast, easy financing is what we do best!
Depending upon your business model, there are many different ways to expand your business. If you’re a restaurant owner, then expanding your seating capacity or parking area might be a wise investment. Adding another oven or deep fryer might expedite food production allowing you to turn tables faster. Businesses that carry inventory could increase their product selection.
Expanding the number of vehicles that you have, gives you the ability to service more customers or jobs. You could also expand your products and services to cross or up-sell to your marketplace. Also, you could take on additional staff to manage a bigger workload.
Remodeling and Improvements
While this area may seem like it’s an expense instead of an investment, it has the potential to significantly increase your revenue.
If you’re in the retail sector serving the public, having an updated image and environment can be crucial to attracting and maintaining a loyal customer base. Staying ahead of your competitors is crucial.
If you’re an auto service or repair shop, adding additional bays, lifts and diagnostic equipment can result in a greater servicing capacity and more revenue.
The type of equipment that you have (or don’t have) can positively or negatively affect your business. One way to capitalize on a purchase or upgrade of equipment is when the investment gives you the ability to expand your products or services. Doing so, creates additional streams of revenue for your business that don’t currently exist.
Another important consideration is automation. Anything that you can do to limit or reduce your labor costs increases your profits. Automation also reduces the production time necessary to produce your products. And simultaneously increases your production capacity.
Most business owners are concerned with taking on too much debt. And rightfully so…
But after reading this information, we think that you’ll agree, using someone else’s working capital to build your business is not only perfectly acceptable but smart. Call Mulligan Funding at 855-326-3564 to discuss your financing options today!