November 27, 2019
Business Financing Options Available for Brick and Mortars
For instance, people who love to shop want to see products in-person before making a purchase. Luckily, these kinds of shoppers keep brick and mortar retailers in business! As long as brick and mortar companies exist, they'll need business financing to keep their operations going. In this post, we'll list the top brick and mortar financing options that are available.
Reasons for Small Business FinancingOne of the biggest reasons companies use small business financing is to stay afloat when cash flow shortages occur. By applying for additional working capital, business owners don't have to worry about where to find cash to fund the next operating cycle. Another reason to pursue financing is to keep up with competitors. For example, companies that have lagged in purchasing new equipment or haven't kept up with technological advances may end up scrambling to catch up. In addition, within payroll and human resources, funding may be needed for seasonal shortfalls of workers.
Inventory ManagementInventory is any item that your business owns that you intend to sell in the future. For companies, the quicker these future sales occur, the better. Inventory costs money to sit in warehouses, whether it’s the finished goods or raw materials. Having efficient inventory management will help keep inventory at optimal levels. A goal of inventory management is to have enough, but not too much of the products and the components needed to make new products. Coordinating tasks for buying materials, storing them, and then creating the finished goods is part of this inventory management. Modern inventory systems are designed to streamline these processes, which improves efficiency and lowers costs. While efficient inventory management systems can help, cash flow shortfalls can still occur during the normal operating cycle. When products are sold, customers are often given terms, which means the cash flow to replenish the stock may not be available. This is a common challenge for inventory managers.
Payroll and Human Resource ManagementIt would seem that payroll and human resources (HR) should be two separate functions in a company, but there's an overlap. Payroll handles the regular paychecks for employees, but HR is responsible for approving incentives for employees. In smaller companies, the HR department can often serve the role of the payroll department. Many companies rely on temporary workers due to seasonal surges in customer activity. Retailers and package delivery companies may need extra hands during the holidays. Farmers will need more people during the harvest season. An HR representative will likely be responsible for coordinating these seasonal adjustments even if the payroll department will take care of the actual payments to these temporary workers. Whichever department handles the payment issues with temporary staff, this function costs money. As it is a short-term funding need, a working capital loan would be the appropriate type of funding in this instance.
Equipment PurchasesEquipment is essential to the operation of many businesses. Old equipment will either break or become obsolete, no longer serving the needs of the business. When it’s time for new equipment, business owners may decide to fund the purchase of this equipment with a loan. Depending on industry, equipment is expected to last for a few years. This provision will likely require a longer-term funding option, and equipment loans are often a good match for these purchases.
Technology ImprovementsTechnology changes constantly. Each new development promises to outdo any previous versions. Business owners must determine the benefits and compare against the risks before making investments into this new technology. Some business owners wait too long, though, believing that workers should make do with the technology that exists. However, once competitors latch onto a new technology that proves beneficial, they suddenly have the upper hand, as they’ll use that advantage to steal customers. While spending money on technology makes sense in the long run, it requires a good strategy. Buying the latest-and-greatest is not a winning strategy and will cause businesses to borrow too much money. Smaller companies often don't contain the expertise needed to guide a technology strategy. Hiring qualified people may be a good place to start.
Types of Technology Improvements
- Robotics and Artificial Intelligence which helps automate business processes
- Improved POS systems or new systems for startup companies
- Digital strategy including websites, apps, and eCommerce
- Machine learning for market basket analysis, predictive analytics, and fraud detection
- Cloud technologies and collaboration software
- Systems Integration that ties all subsystems together (accounting, supply chain, inventory management, AR/AP, order processing)
- Business Analysis Dashboards (Tableau, Power BI)
- Product identifiers such as RFID tags and WiFi chips