Why do you think most businesses apply for a loan?
Believe it or not, it’s usually not because they’re doing poorly. Most businesses seek additional funds because they’re growing. SMBs and SMEs are the biggest drivers of economic growth in Australia, accounting for almost 70 percent of the workforce.
Debt is a necessity for growth. When businesses don’t have the cash on hand to reach the growth they’re aiming for; great opportunities can pass them by.
So how do you know whether you need an injection of capital to survive and thrive?
6 reasons your business needs funding to thrive
Managing cash flow
The adage ‘cash is king’ still, applies today. Cash flow is one of the most critical factors to the success of any business. Fluctuations in cash flow are often seasonal. For some, it means investing in bulk inventory before your customers can purchase items. Alternatively, continuing to outlay operational expenses while having to wait for suppliers to pay for an extended time. By taking out a loan, businesses can stay ahead of customer demand without it affecting their cash flow.
Seizing new opportunities
When your business is thriving, it’s important to keep looking ahead to where the next opportunities lie. Adapting to changing conditions ensures your profits continue to rise, rather than plateau. This could mean investing in new equipment, plant, machinery, new office space, property, vehicles, inventory, advertising, or marketing. It could also be as simple as a quick decision to buy additional discounted stock that a supplier is getting rid of. Funding for future growth comes with extra costs, and an online business loan can cover off on those expenses without dipping into your operational costs.
Online lenders would rather loan you money before you need it. Predicting an upcoming shortfall before it hits is paramount. Don’t be caught out because of a failure to plan. Sooner or later, most businesses foresee the inability to pay their bills. This doesn’t make you a bad business owner. A short-term loan may give you the leverage and confidence to push through any shortfalls you may experience and get back on track.
Covering the cost of new hires
Business owners wear many hats, but eventually, most SMEs will need to hire additional help and support. This might mean outsourcing or hiring a new part-time or full-time employee. Whatever the circumstance, the cost of hiring a new employee goes far beyond their salary. Time spent recruiting, training and getting them up to speed is a major investment for any business owner. A business loan may serve as a buffer for the time and cost it takes to employ somebody new, without it affecting your cash flow or revenue.
Investing in innovation
Research and development (R&D) of products and services, creating new product lines, enhancing current services is all part of the innovation cycle of any business. A business that doesn’t invest in its future is sure to lose market share to its competitors in the long run. A short term loan gives you the capital injection you need to invest in the future of your business.
Business is unpredictable. You may run into an unexpected maintenance cost or a situation in which you have to wait for your biggest account to pay before you can cover your expenses. Don’t let these sorts of situations break your budget. Emergencies are time sensitive and often need to be addressed immediately. Having access to capital that will be deposited in your bank within 72 hours is a stress-free and convenient way to overcome these sorts of hurdles.
Having the clarity, drive and desire to take your business to the next level is an exciting time. Don’t let a lack of capital hold you back. Understanding your cash flow objectives and what will help you achieve them is the first step to success.