Securing Financing For Your Retail Store
While retail hasn’t exactly been the most stable industry over the past few years, it’s far from dead and in fact, there are more ways than ever for retail store owners to take advantage of this ever-changing market. One of the first things any business owner looking to really take their retail store to the next level is to secure the right financing.
Choosing the Right Type of Business Financing
Every business is different, and as such, the right type of financing for each will differ as well. Before you decide which type of business financing is right for your business, be sure to ask yourself the following questions first:
- What do you need the funds for?
- Do you need short-term or long-term financing?
- Are you looking to open a second location now or in the future?
- Do you only need to cover the costs of daily expenses?
- Do you need help with cash flow issues?
Small Business Loan
If predictability is important to you and you’re interested in an option that can be tailored to your unique business needs, a Small Business Loan could be the right option for you. One of the benefits of a small business loan is that you’re in control. You choose what you want to do with the money, anything from a large project to purchasing new inventory. Your lender will partner with you to make your success a priority.
Merchant Cash Advance
A Merchant Cash Advance, on the other hand, is based on your business's future credit and debit sales. For repayment of your cash advance, your lender will debit a small percentage of your daily credit and debit sales. If your business is largely dependent on collecting credit card or debit payments from your customers, which is common for a retail store, this may be a viable option.
A merchant cash advance is one of the most flexible business financing options and is often a great option for a retail store whose sales are dependant on the seasons or even the day of the week. You’ll benefit from larger payments when sales are high and small payments when sales are low.
How Much Working Capital Does Your Retail Store Need?
Knowing how much capital your store needs to operate profitably is an important factor to consider when determining which financial product to apply for and how much money to request. First of all, determine what your business really needs, whether it's more inventory, additional equipment, more staff, or stronger marketing.
Set goals and establish a solid plan to get there. Decide which ideas are attainable now versus those that can wait so you can focus on assigning funds to more pressing needs.
Working with your lender to get the best possible solutions for the needs of your business is also of great importance. In order to ensure loan approval, you'll want to make sure that you are in the best financial position.
How to Know When to Apply for Business Financing
All businesses will need financing at some point, but it’s important to know when the time is right for your business. Here are some factors to consider before applying for business financing:
- The amount of time you've been in business
- Your plan for how the money will be used
- Your current revenue stream
- Your cash flow situation
- Your goals for possible expansion
Expanding Into the Online Space
You might be successful enough with your brick-and-mortar retail store, but you can exponentially grow your business and profits by expanding your store into the online sphere. E-commerce is a huge deal right now, and many retail businesses are experiencing incredible growth by selling online.
But opening an e-commerce store takes some capital, which you might not have on hand. That's why a business loan may be the right way to obtain the cash needed to capitalize on this lucrative opportunity.
Once you have the funds in hand, you'll want to use them wisely. Some of the things that you can expect to put your borrowed money towards may include:
- Hiring a website designer
- Online marketing to get the word out
- Hiring a team to manage your e-commerce store, including taking orders, shipping orders, customer representation, social media, and so forth
- Covering the cost of shipping
- Expanding the range of products you offer
Taking Your Retail Store to the Next Level
You already know that starting a new retail store and building it from the ground up takes money. But expanding it once you've established yourself in this industry can also be an expensive endeavour. That's why business financing can come in really handy. In fact, it's often an absolute necessity. Many prospective entrepreneurs simply can't start or grow their retail businesses without it.
Just be prepared when you apply for a loan. Having a good understanding of what you can qualify for and how much to request is key to boosting your odds of approval and getting the funds you really need to be successful in the world of retail.
This article was contributed by Loans Canada, the nation’s original loan search platform.