When starting your own business, not all credit available is the same. Studies show that companies borrowing under a business name have a longer survival rate and higher revenues. However, out of the 28.8 million small business owners in America, 46 percent of them use their personal credit cards for business purposes.
This shows that using personal credit to fund a business is common. In fact, before your business has had a chance to build its own credit, it’s normal to use personal loans.
Most business owners prefer self-funding their ventures using their personal resources and credit, and hustle to make the rest happen. While business loans offer you more benefits, here are ways you can make the personal loans you take for business purposes pay off and ensure that you fulfill your loan amortization goals.
Purchase Only What’s Required
Purchasing the right equipment for your business helps it grow and run faster. The secret to finding the right equipment is looking for efficiency. You can achieve this by getting machinery that has multiple purposes, such as the combination of a printer and scanner for a consulting business.
You can stretch your money even further by purchasing reconditioned or refurbished machinery; however, carry out your due diligence. Look for refurbished products that are certified and with a warranty. In most cases, refurbished equipment is items returned by customers because they did not like them and not because they didn’t work – meaning you are getting an almost brand-new product at a low price!
Your business’ inventory is a huge expense, especially if you are working in the retail industry. If you have to take out a personal loan to fund your business, make sure you get enough products to attract and keep new customers.
Personal loans can also help you get great deals from wholesalers or take care of seasonal hiccups your business experiences. You can also get the most out of your personal loan by adopting the drop shipping business model. This means that completed purchases are directly shipped by your wholesaler, keeping your inventory costs low.
Invest in Marketing Research
Creating a strong marketing campaign will help you attract enough potential customers that will promote your company via social media or word of mouth. The key to getting the most bangs out of your money is by investing in market research. The research will help identify your ideal audience that’s already looking and willing to purchase your products or services.
Market research will also help you learn more about your competitors and the areas you need to improve on to make rewarding marketing plans. You should also create a means of gauging the success of your campaigns, through either increased social media engagement or sales.
The digital option is much more cost-efficient, but you need to be careful that the cosmetic details don’t distract you. Be wary of fun beauty projects like a website revamp that might take your focus away from generating the leads you really need. Instead, ensure your campaign is focused on getting you and your products in front of the people that really matter – virtually and physically.
Gear Yourself for Success
While companies with business loans have three times higher revenues, you can still use a personal loan to get your business started – just be smart on how you use the money. Apart from the tips above, you can increase the effectiveness of the personal loan by focusing on business aspects that offer the highest returns on your investment. Use the personal loan cash solely for greasing the path for more cash to come into your business faster!
- Pros and Cons of Financing a Business
- 12 Tips for Getting Your Bank Loan Approved
- Comparing Loans Before Starting Your Own Business
- Minimize the Risk to Your Personal Credit When Starting a New Business
- Types of Business Loans for Small Businesses