Hard-working entrepreneurs hardly ever credit their small businesses’ success to luck or happenstance. Small businesses have to surmount a considerable number of formidable obstacles in order to achieve profitability. After you’ve managed to generate consistent, healthy revenue, you have to be strategic about ramping up your operations. Forward-thinking preparations and good financial oversight will help you grow your business.
Problems with creditworthiness can prevent small businesses from accessing the same credit and lending resources that larger corporate entities have at their disposal. As you are just starting out, your personal credit score could weigh heavily on how financial institutions and potential stakeholders assess your company’s creditworthiness. As you work towards establishing and boosting business credit, you’ll also need to keep a close watch on your consumer credit score.
The most important thing that you’ll have to do to get your company’s credit into shape is to make complete, timely payments on all of your outstanding obligations. Late payments can really hurt your score, and they can also cause you to accumulate a substantial amount of interest. Racking up too much interest can detract from your total available credit and consequently lower your score.
Monitor your credit to analyze how your use of credit is impacting your score. A monitoring tool that sends you real-time alerts can keep you apprised of where you stand. It can also prompt you to dispute errors or address issues as quickly as possible.
Research Lending Options
Expanding your business operations often requires additional capital to support growth. One option is to seek venture capital funding, which can provide the funding you need to scale up your operations and reach new levels of success. Small business loans are typically a good option for growing entities because they feature reasonable interest rates and predictable repayment structures. The application process is highly competitive, so you’ll need to prepare thoroughly in order to make a positive impression on lenders.
Choose which lenders to approach discerningly. You don’t necessarily have to apply through the financial center that you use for your day-to-day banking activity or go through your local SBA chapter to access this lending program. There is a growing online marketplace of lenders vying for small business loan applications. Ideally, you should select a lender that has experience serving small businesses in your sector and has a working understanding of your practical financial needs.
If you need a rapid influx of capital in order to accommodate your development plans, an SBA loan may not be the best route. The application process is intensive, and it could take many months to get approval. If you ultimately opt to pursue a private lending option, it is imperative that you review lending terms scrutinously. Private loans often bear hefty interest rates, and you want to avoid taking on a payment obligation that could become a big strain on your operating budget.
Alternatively, you might consider pursuing a line of credit for short-term expenses. This option may be preferable to taking out a big loan that would be difficult to repay if you experienced a decline in revenue. Selling accounts receivable to a factoring company might be another viable possibility. In exchange for assigning a secured interest in unpaid invoices to a third party, you may be able to get rapid access to working capital for development without overextending your company’s resources or compromising your creditworthiness.
Ramp Up Your Marketing Activities
To effectively grow your business, you’ll have to grow your customer base. Depending on your industry, this may necessitate branching out geographically to expand your service area. Instead, you may consider offering additional services or products that are in high demand within your core customer base.
To streamline these types of initiatives, you’ll need a multifaceted marketing campaign that uses several mediums to engage prospective customers. Many small business owners find it advantageous to work with a professional marketing company. While you’re busy with the nuts and bolts of day-to-day management functions, professional marketers can help you drive digital marketing campaigns and generate leads.
Lastly, be sure to use data analytics to measure the efficacy of various outreach tactics. Examining which forms of outreach yield results and which ones aren’t earning you any business will enable you to use your marketing budget efficiently. Using your resources judiciously can make your company better able to withstand growing pains as you work towards generating more revenue.