There comes a time in business when drastic risks are deliberately taken. Of course, this is not to gamble the future of the business - it's simply to make it grow bigger than it's currently projecting.
The essence of taking loans shouldn't be to squander it on inventories or buyouts that aren't important. The reason for loan is to borrow money and use to expand intelligible on all aspects of the business.
When I started as an entrepreneur, a day came when I needed to meaningfully get loan for the cause of business growth. Maybe you at that point in time or you aren't sure whether that time has come for your business.
The way I did mine was to re-access what I needed it for and why it's needed now. When you've checked out the reason and it looks legit and important. Then it's a go.
But before you set out on that journey, these are four reasons your startup may need a business loan. The first is:
1. To Get More Hands on Deck
When starting out on a business, you literally be the one playing every role in the book. When I started my e-commerce startup, I was the bookkeeper, marketing arm, customer service provider and mentor. While this is a good practice for the beginning pocket-strapped entrepreneur, a time will come when you have to transcend this level to another.
For me, my time came when I noticed I wasn't paying attention anymore to the overall business vision. I knew I started my e-commerce business to change my world in a positive way, but being so busy made me forget what were important to me.
I knew right there and then, that I needed to expand. The business was still growing and showing positive green lights of future growth. I knew I would beat the growth projections my business analytics were showing me if I bring on board more talent to assist me.
So I had to get a business loan. I needed it to get more people that will help relive me of the numerous tasks I was running so I could focus on the important stuff.
Likewise for your business, there is need to expand and get more virtual or stationary workers if you've found out the work are numerous and much. An investment into new a staff force can sometimes help triple your revenue projects because it will help relieve you of work, and give you ample time to think and strategize better.
2. Get a Bigger Physical Building
Businesses are created to grow. And when they grow, you and your team shouldn't shrink and maximize every small space of your office. The reason for growth is to expand, not manage.
I believe that loan should be something you take on when you really believe that it's necessary for your business at that specific point in time. If you believe your office space is no longer enough for you and your team, then take out a loan and get a bigger place.
3. To Invest in a New Business Opportunity
Yes, I know. This happens to every entrepreneur. You started up sometimes ago and your startup growth has been showing serious green light. Everybody is elated and you're proud of what's happening.
Then something big comes along that if you invest some money, it will help your startup reach more people and make more money. But inevitably, the money to invest into it isn't something you or your whole business can afford. Ever been in that scenario before?
If you have been there, then you are absolutely not alone.
I believe personally, if the loan will help your business grow effectively, reach more clients and serve more people - then it's a go. Risks are the backbone of business.
It's either you're taking risks or you are not taking risks. Those who risk it and invest into a new venture, new angle, new startup, or a new buyout, are those ones who will likely succeed on the long run.
If you, as an entrepreneur, will take risk to the tune of taking out a business loan in other to invest, then do that, especially if you've checked your sales projections and found out that there is a high chance that the new business opportunity will propel your startup forward and bring in more sales. When the statistics are showing you positive results, go for it.
4. To Purchase Physical Equipment and Inventory
In point one, I was emphasizing on the need to get more hands on deck in other to relieve you the entrepreneur more time to think and strategize for the business. While this is paramount to your business success, you can't really expand without upgrading or adding more equipment.
If you plan to bring in more workers to assist in the startup, then you need equipment that would be enough to cater for the increasing workers and the increasing clients.
If you run a business that has spike seasonal sales, you would also need to purchase more inventories to match the spike in sales that comes from customers.
But sometimes, the costs of the equipment or inventories to be purchased are sometimes way higher than revenue set out for equipment purchase. That's when getting a business loan will come in handy.
Whatever will double or triple the growth of your business is worth investing money into. It's worth taking a business loan for.
But before you go for inventory or equipment buyout, check your sales projections of last year, and analyses it to see if you will be able to sale above the loan and still make a big profit from it.
If the seasonal sales spike of the previous years have brought in optimistic numbers each time, then it's safe to get a business loan.
Remember; always go for a business loan when you know it's paramount for your business at that point in time. You may not always have the money to do what you need to do in that business. That's why there's something called a loan.
Take out a business loan if it will help your business and reach more audience.