Monday, September 2, 2019

5 Tips for Expanding Your Small Business (The Right Way) - Entrepreneur

5 Tips for Expanding Your Small Business (The Right Way) - Entrepreneur


5 Tips for Expanding Your Small Business (The Right Way) - Entrepreneur

Posted: 08 Aug 2019 12:00 AM PDT

The best path to growth can be learning from others' missteps.

5 min read

Opinions expressed by Entrepreneur contributors are their own.

Many small-business owners want to grow their companies, and they want to do it fast. But if you rush into expandsion without a plan, you risk losing everything you've worked so hard to build. Take Wise Acre Frozen Treats, which hired too many employees and bought too much equipment before they had the revenue or startup capital they needed; the company went bankrupt in just a few years. 

To avoid making similar mistakes, heed these five tips for expanding your small business (the right way). 

1. Develop a company culture. 

A strong company culture is what will keep your small-business team together during times of exponential growth. If you're not sure where to start, ask yourself and your team questions such as: 

  • Why does our company exist?

  • Why do we do what we do?

  • What does our company believe in?

  • What are our values?

  • Where do we want our company to go, i.e. what's our company's vision?

When employees feel connected to your company, they'll be more likely to stick it out through uncertain times. Plus, a strong company culture can actually attract new customers to your business, so be consistent with it and splash it everywhere, including your website, social-media platforms, marketing materials, etc. When your target audience can see the values behind your company, they can connect with your business on a deeper level. 

Related: Steps to Starting a Small Business

2. Hire the right people. 

The hiring stage is critical to growing your business successfully. It's important to take your time and find the right people for the job. Do so and things will go swimmingly. Hire the wrong people, and all of your hard work will come crumbling down. To avoid the latter fate, consider recruiting people based on their technical skills and experience. You should also determine if they'll be a good fit during this time of growth. For instance, you could ask a candidate how they interpret your company's vision to see if they'll mesh well with your team. Startup life isn't for everyone, so find employees who will be eager to take on the challenge. 

3. Focus on innovation ... in the right places.

When expanding your small business, you might be tempted to spend a bunch of money on improving your product or creating/offering more products. Instead, focus on innovation in other areas. As one example, try innovating your onboarding experience or adopting new technology like live chat to scale your customer service, as with this savvy Petplan campaign. Innovating your current processes will take up less of your resources, and it's critical when growing your customer base. Once you've achieved more stability, then you can think about introducing new products. 

 

4. Build brand recognition. 

When a consumer sees your logo, advertising campaign, product packaging or slogan, you want them to be able to recognize it as your company. This all comes down to building brand recognition. Take Nike's Iconic "Just Do It" slogan. When consumers hear that phrase, they instantly know whose behind it. Your small business might not be able to reach Nike-levels of immediacy, but you can still work to become a well-known brand among your target audience. An easy way to do this is to start networking more often on social media. The more times consumers see you online, the easier your company will be to remember. 

Related: 6 Innovative Ways to Increase Brand Awareness

5. Don't forget about existing customers. 

Many small-business owners focus too much on getting new customers and not enough on keeping the ones they already have. In fact, according to statistics from Small Business Trends, just six percent of small businesses focus on customer retention. To make your existing customers feel valued, consider creating a satisfaction survey that allows you to gain insights on what your customers love about your business currently, what could be improved and what they're looking forward to regarding your expansion. You can then use this feedback to improve your business and reduce customer churn. After all, customers who are happy with your business will be more likely to spend more money and recommend you to their family and friends.  

Over to you....

Expanding your small business is exciting, so long as you don't get carried away. By going into the expansion with a plan in mind, you'll be able to stay true to your values, keep your star employees, impress your customers and attract new ones, all of which contributes to the recipe for a successful business.

How to Choose the Best Small Business Loan for Your Needs - Entrepreneur

Posted: 19 Aug 2019 12:00 AM PDT

Here are six types of loans that could help you launch or expand your small business.

5 min read

Opinions expressed by Entrepreneur contributors are their own.

Starting a business can be expensive, and so can expanding one. No matter where you are in your business's life cycle, from startup to growth, a business loan can help get you started or address specific needs along the way.

A 2019 survey by a group of Federal Reserve banks explored the state of small business credit, finding that 43 percent of small business seek external funds and seven in 10 small employer firms carry outstanding debt. About 56 percent of respondents applied for loans to expand their businesses, pursue new opportunities or acquire business assets, and 44 percent needed the funding to meet operating expenses. Results also suggested that most small businesses apply to online banks or large lending institutions for these funds, though some use credit unions and other smaller banks. 

When considering financing options, it's important to understand the different types of loans available to small businesses so you can select the best option for your needs.

Term loans

Term loans, also known as long-term loans, are best for business owners with great credit who are requesting a lot of funding. They may not be a good option if you're starting a new business, since lenders often want to see a track record of success before taking on risk. 

The term loan application process is lengthy, and large banks reportedly approve about 25 percent of small business loans. If your application is accepted, you'll pay a principal amount plus interest each month until your debt is paid in full. Term loans are most often used to buy real estate, acquire another business, remodel or renovate a commercial space or support long-term business expansion.

Short-term loans

Short-term business loans provide fast cash for people aiming to bridge cash flow gaps, address emergencies, pay off higher-interest debt or take advantage of new business opportunities. One advantage of this type of loan: You often don't need a great credit score to be accepted. These loans also tend to involve less paperwork and fast processing, so you can feasibly get the cash you need when you need it.

Unfortunately, short-term loans must be repaid in a relatively short amount of time, often two years, and payment schedules may be on a daily or weekly basis. They also generally come with a relatively high APR compared to term loans. Something else to keep in mind: Loan amounts are usually capped, so if you need more than the limit, you'll need to look elsewhere for financing. 

Secured loans

Secured loans are a viable option for businesses seeking the lowest rates and for those with poor credit ratings who need funding (as well as those who are seeking to repair their credit ratings). In essence, all small business loans are secured by some type of assets, such as a history of success, equipment, invoices, inventory and purchase orders. However, for some small businesses, a loan secured by personal property is the only way to acquire financing.

Equipment loans

Equipment loans can be a great option for startups and established businesses, and they can be used to finance nearly every type of business equipment (including vehicles). The reason new businesses can take advantage of these loans is that the equipment secures the loan regardless of the success or failure of the company. Loan rates are often reasonable and vary depending on the age of the individual's or business's credit rating and financial picture.

Invoice financing

Invoice financing is a type of short term loan that uses your invoices as collateral. It's most often used to resolve cash flow problems arising from unpaid invoices. This loan type is only available to companies that rely on invoicing for payments and so is most commonly used by B2B businesses. If you have cash flow issues because you invoice several clients who pay at different times, this can be a great way to stabilize your cash flow.

Under invoice financing, a lender advances you a percentage of your total invoicing amount, usually 85 percent, and holds the remaining percentage as collateral. While you wait for payment from customers, you pay a weekly fee to the lender; once the invoice is paid, the lender returns the held percentage minus fees.

Purchase order financing

Purchase order financing can present a great lending opportunity for startup companies that receive a lot of orders but don't have the cash to fulfill them. In these cases, similar to invoice financing, the purchase order secures the loan. Once you have a purchase order, the lender directly pays your supplier to manufacture and deliver the product to the customer. Once delivery is accepted, the customer pays the lender. The lender then deducts their fees from this amount and pays you the remainder, which can be counted as your profits. 

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