After shopping around, comparing rates and terms, you finally find the best loan for your small business. You got approved for the loan, and the money is heading for your bank account.
The most important thing to remember is that the money you borrowed is meant to grow your business, not make your life more comfortable. It is easy to justify spending money on creature comforts when you come into a large sum but resist the temptation.
Ask yourself, “Is this going to improve business, or is it just going to make me more comfortable?” If you can’t see how spending money will give you a return, think seriously before taking out a loan.
If you have already gone through the approval process, then you likely have a plan already written for the money. Stick to your plan. This is very important, so remember your goals for the loan once it's taken out; it can be very easy to stray from the plan, investing in things that won't directly improve the business.
Below are some of the best ways to spend your small business loan to ensure that you get the most return on your investment.
Marketing is one of the most important aspects of running a business today. With countless local and online choices to choose from customers can be fickle. Consider spending some of your loans on advertisements to promote your business.
Bear in mind that not all marketing is created equal. The media you choose largely depends on your business model. Do you run an online store that sells to customers all over the world? Advertise heavily online towards your target demographic. Maybe your business is entirely local instead. Invest in local advertisements. Take out an ad in the local school newsletter or rent a billboard. Expose your business to the local community.
If your business is relying on old, outdated equipment, it could be slowing down productivity and costing you money. Do you have an old POS system that requires constant repairs and leaves you unable to process transactions? Maybe it is time to invest in a new one. More uptime means more profit.
Inventory is another excellent use of your small business loan. This is especially true if you work in an industry with constant changes or new releases. It can be challenging to find the money to buy large amounts of inventory at times for small businesses, but it can be worth the investment.
You can also take advantage of this opportunity to expand your current offerings. By offering a more extensive selection of products, you can attract new customers and even bring existing customers in again to check out your new stock.
4. Update Your Website
If your website is outdated, it could be causing serious harm to your business. Today over 60% of online searches are done from mobile devices. If your website does not support mobile devices or it has broken functionality, it is likely driving away customers.
Invest in a new website that is compliant with both desktops and mobile devices. Ensuring compatibility helps attract new customers when they come across your website, rather than driving them to your more technologically advanced competition.
5. Invest in Your Staff
This can be hiring new staff to ease the burden on your existing employees. It could also be investing in additional training for your current employees.
It is easy to balk at the idea of investing in additional training for employees, especially in retail and service industries, but do not discount the benefits. Additional training can increase productivity and allow your staff to handle stressful situations more easily. It is also good for morale because you are showing your employees that you care enough to invest in them.
Sales based businesses can especially benefit from additional training. Empowering your sales team with the knowledge and resources they need to succeed can increase sales, which increases your profits.
6. Managing Your Loan
It is easy to see an influx of funds as an excuse to spend more money, but it is essential to resist this temptation. Here are a few things you can do to make sure you do not abuse your loan and make it last as long as possible.
Open A Separate Account
Never keep your loan balance in your primary business account. Instead, open another account and keep your balance there. As you need money, transfer it to your main account. Never use your loan account as a spending account.
The reason for this is simple: it's easy to lose track of what's what and think you're more comfortable than you actually are by combining the two pools of money.
Don’t Spend it All at Once
It is all too easy to put together a laundry list of things that you can do to improve your business but take it slowly. Making a list of investments is a good idea and a great way to keep you on track, but do not use a list as an excuse to spend all of your money at once.
It is better to spend the money in stages to allow you to assess the effectiveness of investments and determine the best ones for use in the future.
Communicate With Your Lender
As with anything else in business, communication is vital. Keep your lender informed on the use of funds. Always be sure to make your payments on time or ahead of time if possible.
By maintaining a healthy relationship with your lender, you are ensuring their willingness to work with you if you run into problems. A lender who has records of your communications with them is going to be more understanding if and when you run into problems.
In business, it is always important to maximize your return on investment, but nowhere is this truer than when you take out a loan. Plan carefully and spend accordingly to grow your business.
If you're looking to take out a fast, flexible, affordable business loan, click below to apply now.