Tag Archives: finance

5 Ways to spend your business loan wisely

Business owners take out business loans for a variety of reasons, be it to get their business started or to invest in areas of their current business to help them expand and grow. The important part of taking out a business loan, however, is knowing exactly what you’re going to spend it on. And it’s important because this is how you will generate a profit to pay off the loan for maximum return on investment (ROI). When you know what you need it for, you’ll be able to use the business loan calculator to work out how much you’ll need and how much it will cost you every month to pay it off.

As a business owner, you need to make sure you spend your loan wisely and focus on the core areas of your company. We’re going to look at a few business expenses that could benefit from a business finance loan. You know better than anyone what your business needs are, and you should keep them in mind while reading through the options below.

Inventory

A core asset in any business is their inventory. The product you offer your clients is what leads to sales and profit – a goal for most companies. When you apply for business finance, you have an opportunity to invest in your inventory and improve or restock in order to increase sales.

This is how you provide higher quality products and meet the demands of your customers. It’s a surefire way to earn an ROI for your business loan and have happy customers.   

Equipment

For both service- and product-based companies, the business equipment that is used to manufacture products or provide services is a crucial asset. Equipment is a large expense for  businesses to buy, new or used, and there are still other costs involved in owning the equipment.

Depending on the equipment, business owners might have to pay to store the equipment somewhere safe. But for all types of equipment, there are operation, training, insurance and maintenance costs that need to be included in the business’ budget. Machinery, computers, cameras, tools and even vehicles can be considered as business equipment. Just be sure to read up on any business vehicle finance requirements when looking for vehicle-specific financial solutions.

With a business loan, you will be able to afford the costs of owning your equipment but you’ll also be able to buy more equipment and increase your production capacity. This will allow you to provide more for your customers and further increase your ROI.

Technology

Investing in your equipment and technology practically goes hand-in-hand. Upgrading your equipment and integrating the latest technologies into your business processes will open up possibilities.

Technology is becoming increasingly important in all business operations across every industry. The more up-to-date your business technology is, the better your chances of being able to offer your customers the best service.

Technology is a great way to invest in your company, and is certainly a wise way to spend a business loan. It has the ability to improve product and service quality, reduce operation costs, increase a project’s turnaround time and, overall, make work easier for each employee. If a technology seems complicated, it’s only going to prove a convenience for the company and should, therefore, be invested in.

Customers and clients are also more attracted to the latest and greatest on the market. With new technologies at your disposal, you will have an edge above your competitors and the advancements that customers are looking for. And that’s how spending your business financing on technology will encourage an ROI.   

Digital marketing

Your website and online campaigns are an important aspect of marketing your business. Great marketing leads to new customers, an increase in sales and a better brand reputation. You aren’t relevant if you aren’t invested in your business’ digital marketing efforts. Spending part of your loan on your online presence will make you visible on the internet and provide a new channel of communication with your customer base. And all of that will be in your company’s favour for an ROI.

Recruitment

Another wise business loan spend would be on recruitment. People are one of the greatest assets in a business. Sometimes you would need a business loan to help attain and retain the top talent in your company. They are the ones who are able to innovate and set your business as a benchmark in the industry. They are the people who your client base interact with and who, in that regard, uphold your quality service and reputation.

Any of the above business assets would benefit from a business loan. Be sure to assess your company’s needs before you apply for business finance and be prepared to allocate the funds accordingly.

Five types of marketing to invest in for your small business

As a small business owner, you know how important it is to market your business. You need to engage potential clients and retain your current ones. But it can be difficult to know exactly what type of marketing you should use to do so, especially if you are new to the world of business ownership.

If you have applied for business finance in South Africa you will need to start creating a marketing strategy from the get go. Not sure where to start? Below are the five types of marketing to invest in for your small business.

Google AdWords

Google Adwords is one of the smartest ways to use your marketing moolah. While you should try to improve your organic reach results using SEO (search engine optimisation) tactics, AdWords can certainly give you a leg up on the competition, especially when it comes to digital marketing.

Google searches are one of the top ways in which customers find your business online. Which means that spending money on an AdWords campaign is extremely effective. Be warned that AdWords is not an “autopilot” way of advertising, you will need to monitor your campaigns and make changes when necessary. While it might be costly, it is a marketing strategy that will pay off in the end.

Facebook advertising

Did you know that almost two million small businesses pay to advertise on Facebook? It is one of the most inexpensive and effective ways to reach an audience that is interested in what you have to offer. And, almost everyone uses social media these days, so your customers are guaranteed to see your adverts.

Facebook ads excel at advanced targeting, which means that you can set up the demographics of who you want to see the ads, such as certain age groups, geographic locations, online behaviours and much more. For a small business that has just taken out business financing in South Africa, the affordability of Facebook advertising makes sense. All you need is a solid headline, some good descriptive wording, an inviting image and the right link.

Printed business cards

Many entrepreneurs feel that, because the world has become so focused on digital technology, printed marketing is no longer relevant. However, this could not be further from the truth. Business cards are affordable to print and you can create a truly unique design for yours using free software or by asking a professional designer.

Not only can you give clients and customers your business card, but you can also give them to potential business partners at networking events. You will need to ensure that your card design is relevant to your company and that your details are clear and easy to see. Be creative and think out of the box, for example, if you are a small artisanal doughnut store then design round business cards that look like the doughnuts you have on offer.

Email marketing

Email marketing is still one of the most effective ways to market to clients. And, if you are using business financing in South Africa, it is an option that will suit any budget. Email marketing is relatively simple to use and there are several software options on the market.

It is effective for small businesses especially because you will be able to reach an audience who is already interested in your products or services, those who subscribed to your emails in the first place. You will need to ensure that you send these emails at the right time of day so as not to annoy people and only send to those who have opted-in to the subscription.

Google My Business

For small businesses hoping to make a mark, Google My Business is one of the best types of marketing to invest in. It is completely free and is easy to use. All you need to do is provide your up-to-date contact details and allow the system to combine all of your information such as your Google+ profile, Google Maps profile, your Google reviews and more.

Ranking your Google My Business listing is one of the most important things you can do for your business, as this will allow it to show up in Google search results when someone searches for the product or service you offer. For example, if someone searches for “pet stores Cape Town”, they will see Google My Business listings before organic search results. Having your business in these first listings is imperative to boosting any small business.

Think smart for your business

Marketing strategies are highly important for any small business, especially if you will be using your business finance in South Africa for part of your marketing budget. With the innovations of technology, there are easy and affordable marketing methods you can use for your small business, such as Google My Business, Facebook advertising and Google AdWords.

You can also go the more traditional route and print out business cards to hand out to clients and at networking events. Be sure that whatever type of marketing you use, it is relevant to your business, easy-to-use and will not break the bank.

Equipment finance with bad credit: it’s not impossible

A bad credit record can be a stumbling block to anyone who is applying for a loan. This can make the process difficult and can affect the outcome of your loan, such as higher interest rate and the need to provide collateral before the bank will approve your application.

 

If you need to purchase equipment for your business, but do not have a good credit score, applying for finance can be a seemingly impossible task. But, if you know what to do, you will likely be approved for equipment finance.

Check your credit record for accuracy

Contact Experian or TransUnion to acquire your credit report and read through it carefully, looking for any inconsistencies. If you see anything that raises a red flag, phone the credit bureaus to immediately remove all negative data, especially if you know you have repaid the debt in question in full. You will then need to ensure that this is changed on your credit history to show the debt is repaid.

Explain your debts

Your chosen bank or financial institution will want to know the exact reasons why you have a bad credit rating, so it is important to have the pertinent facts readily available. They will want to know whether the debt was entirely your fault or not, and what you are planning to do to rectify it. Lenders are already wary of lending money to those with a bad credit record and if you are unprepared to explain your debt or how you will rectify it, your finance application is likely to be rejected.

Offer additional collateral

If you already own equipment or have a property, then you should consider offering this to the bank as collateral. The bank will look favourably on this, as it will lower your risk in their books. They will be able to sell this collateral should you be unable to repay your loan, making granting your loan easier. It is an effective way to gain confidence if you have a bad credit rating, and will work towards securing your loan.

Try an alternative lender

Rather than going to a bank, you could look into going to an alternative lender. These lenders often look at the positive aspects of your business rather than at anything negative. They will see it as an investment rather than scrutinising your credit score, but be sure to research every aspect of your chosen alternative lender. Make sure the terms of the loan are all in order – it may look fantastic on paper, but this does not immediately make it the best choice.

Find a cosigner

Finding and using a cosigner is often one of the best ways to secure a loan. The bank or financial institution you are applying to for finance will see this as a positive endorsement of your willingness to alleviate yourself from debt, but be warned that your cosigner will be taking on part of the debt too. And that can put a strain on relationships if the chosen person is a friend or business partner.

Offer a larger down payment

One way to secure finance with bad credit is to offer the bank or financial institution a larger down payment. If you are having difficulty finding a cosigner, making a larger down payment may help to assure the bank that you are not a high risk applicant. You will, however, have to pay at least 20% upwards, which can be a difficult task for those who are battling with finances already.

Expect a higher interest rate

You will need to take into account the fact that a bad credit rating will incur higher interest rates. You will need to prepare financially for this and cut back on as many expenses as possible in order to make the monthly payments in a timeous manner. Until your credit rating improves, you will be seen as a high risk client and so the bank or lender views lending to you as a liability.

Settle the payment terms of your loan

Read the loan terms carefully and ask the bank to explain anything you may not understand. Usually, a bank will be very straightforward with their terminology, but some lenders may use terms that are confusing or ambiguous. Be sure that it is understood you can only pay back a certain amount and understand the interest rate and fee structure fully before signing anything.

Conclusion

Equipment finance with bad credit can be a hurdle for a business owner who already has tight finances. But, if you are willing to put in the work with the bank, you will likely be approved. Provide all information you need and be prepared to explain your situation, but do not feel judged or ashamed, your bank will be understanding to your situation and you will be able to move your business forward.

How to give your business an X-factor

 

The business world is like the reality TV show Survivor where only the fittest make it. But what makes a business the fittest? If you ask your average joe on the street they’ll most likely tell you about determination, persistence and hard work. Of course, these attributes count but the problem is many other businesses carry them too.

According to Fortune magazine, only a third of the companies succeed. The question is, how do they make it and what separates them from the rest? The key could lie in how well your business stands out. Does your business have an X-factor? Does your brand leave a long lasting impression on the customer long after they’ve left your store?

Here are a few ways to set your business apart.

What’s in a name?

The inspiration for business names can come from all walks of life. For example, 7-Eleven was named for its extension of working hours from 7 pm till 11 pm. Harpo is Oprah’s name written backwards. And Apple was named after Steve Jobs’ favourite fruit.

The name you pick could have an impact on how well your business does. It is the first thing customers see. So, it should be memorable and catchy. And stick with the customer. The name you choose should reflect not only your brand but your target market. According to studies, certain sound inspires specific emotions. An unforgettable sound will stay embedded in the customer’s mind and they are likely to remember your name.

Make your customers feel valued

Treat your customers like they are royalty. Your customers are key to making your business a success. If your customers aren’t satisfied with the service provided, they will likely move on to the next competitor. You need to make sure you cater to their needs and provide exceptional service. You should go the extra mile and do what your competitors aren’t doing. This will set you apart from the crowd.

Win your customers over with an apology

If can take just one negative experience for a customer to write off your brand. When you make mistakes you need to admit your error and apologise. You can also take things a step further and compensate the customer with a reward or a freebie.

Be innovative

We live in an ever changing world and your business needs to also evolve. If you don’t innovate your business it won’t survive. For example, Nokia and Kodak failed to innovate themselves and they ended up losing customers. You need to keep up with the competition and the times. Your business may need to invest in new technology which helps provide the best service. You may need working capital to purchase high-tech resources and you could acquire funding through asset finance companies in South Africa.

Improve business efficiency

Make sure you supply a better and faster service than your competition. You need to do regular assessments on how you can improve your business. You can also get feedback from customers. Find out about their needs and what would improve their customer experience.

Expert in your industry

Be known as the expert in your industry and it’ll give you the x-factor. You could do this by providing books, posts, videos and training. This will set you apart from other businesses providing the same service.

Deliver on your promises

Do what you say you’ll do. Keep your promises to the customer. Don’t say you’ll do something and then end up not delivering. Customers need to know they can trust you and rely on you and that you’ll follow through on your word. Return phone calls, respond to emails and respond to them on social media.  

Word of mouth marketing

You need to get the word out about your business. Word of mouth marketing is an important tool for your business. According to Jay Baer who is an American marketing consultant, 92% of consumers trust recommendations they receive directly from family and friends. So, if you apply excellent service to your customers, they’re more likely to go and tell other people.

Walt Disney once said,“Do what you do so well that they will want to see it again and bring their friends.” And he was right, if you provide exceptional service your customers are likely to remember you and tell their friends about you.

Thank your customer

Your customers need to feel valued and appreciated. Showing gratitude to your clients could separate you from your competition. And it could also improve customer satisfaction and increase customer loyalty..

Use testimonials

It’s a good idea to have personal recommendations and testimonials on your website. When clients see that other people were happy with the service you provided, they’ll be more likely to be persuaded. Celebrity endorsements are also a great idea. People will feel that your service or product is excellent if a certain celebrity was willing to use it and endorse it.

An X-factor is the thing that separates you from the rest. And a business needs to have this in order to make it in the long run. If your business just blends in with the rest of the others in the marketplace, people aren’t likely to remember it.

 

Pros and cons of a joint venture

 

Sometimes two heads are better than one. Collaborating with other businesses could make your business grow faster and expand your knowledge and resources. Joint ventures help the business owners grow in the areas where they lack expertise and skills. And both companies will be able to share financial burdens. If the two companies work together well it could be a win-win situation where both companies gain.

Here’s what you need to know about starting a joint venture.

New sets of skills and resources

A joint venture has many advantages and one of them is that your business will be able to learn and gain a new set of skills and resources by partnering with another business. And you won’t have to put down an investment to acquire these skills. Your business might be lacking on skills and by the end of the joint venture, your might gain new knowledge which helps your business to be more fruitful. For example, a wedding events company can collaborate with a highly skilled photographer. They both benefit from each other because they offer different traits to the partnership.

Limits risk

When a business decides to take on a new project it will always be a risk. The project can either be successful or fail. When a business joins with another business for a certain project, the risk is shared between the two parties. This limits the liabilities of both parties involved in the business venture. For example, Agriculture is best suited to a joint venture because the equipment, land and the supplies are extremely expensive. And it can be difficult to get agricultural finance. If farmers collaborate with other farmers, then their expenses will be shared. Farmers could share their equipment and be able to cut down on costs.

New markets

You’ll be exposed to a new demographic When your business partners up with others, it will automatically be exposed to a whole new set of customers. The goal of a business is always to grow, evolve and gain new market share. Partnering up with other people can help your business expand because you’ll gain access to their customers whom you wouldn’t have normally been able to reach.  For example, in the 90s Nike partnered with Michael Jordan a famous basketball player and made millions. Avid fans of Michael Jordan began to buy the Iconic Jordan sneaker and Nike sales went through the roof because of the joint venture with Michael Jordan. Acquiring a partner in the business realm can help you reach higher targets and give exposure to your product. Just make sure the person you’re partnering with has a clean reputation because they will represent your company. Whatever they do will have an impact on your business. You should avoid doing business with a partner you don’t trust.

Versatility

A joint venture is flexible and versatile because you’ll be able to establish the timeframe in which you want the venture to last. It can be a short-term agreement or it can be long-term. The venture can be finished once the goal has been reached.  

Cons

Different managing styles

Your business might have a certain culture and way of managing things which clash with the other party. If your styles clash then your joint venture might not work out and could fail.

Shared risks

A partnership will always be a risk. Some partnerships soar and do well, while others bust and fail. There are many reasons why joint ventures fail and one of them may be that one party contributes more to the venture whether its skills or resources. This could cause disagreements and the joint venture to fail. There should always be an equal balance of contributions or the party contributing more might feel cheated.

Written agreements

Misunderstanding and miscommunication can break down trust and cause conflict. Make sure you don’t just end with an oral agreements but everything should be written down. Taking a person’s word and leaving it at that could cause conflict at a later stage. Make sure all the responsibilities of each party are outlined and everything is in writing. This will also solve any costly misunderstanding which might occur down the line and break down the partnership.

A business should always be looking for ways to do things which can make them be more efficient and effective. Joint ventures provide the perfect platform to gain skills, knowledge and expertise which your business may lack. If you want to start a business venture, you need to find other people who want to reach a similar goal to yours. You need to make sure they are trustworthy,reliable and they are financially secure. Importantly, you must ensure they have a good reputation and image.