How to Use a Business Line of Credit for Growth
In this post, we’ll list a few ways that you can use your line of credit to expand operations, kick-start growth, and optimize revenue. It’s possible that some of the ideas mentioned in this post won’t be included in your line of credit terms, as some companies have usage limitations. Therefore, you should review your line of credit terms prior to pursuing these initiatives and ensure that you’ll be able to spend your financing on the areas that you’d like.
6 Tips for Using a Business Line of Credit
1. Order Inventory in Bulk
Did you know that buying in bulk can save you money in the long-term? When you have a bigger budget due to a line of credit, you can invest in mass quantities of the items you use or sell. Ultimately your cost per item will drop, so you’ll make a better profit, and won’t have to make smaller orders in the future.
2. Hire More Employees
Many business owners struggle to recruit employees to fill pivotal positions because they can’t afford additional payroll, or even the recruiting costs. If you’re understaffed, this can be detrimental to your operations, and could affect how you conduct business. Even worse, it could cause you to overwork your current staff, which could leave to significant turnover. If you receive a line of credit, you can utilize this money to meet payroll, and invest in building a strong team.
3. Increase Advertising
Marketing your business enables you to spread the word about your products or services to potential customers. Testing different strategies and optimizing your acquisition formula is key to saving time and money. Once you receive a line of credit, you can pay for sponsored Facebook content, advertising space in local publications, or creative flyers. The more that you advertise, the more you’ll be able to understand your customer base and what resonates with them.
4. Upgrade Technology
Are you using an outdated timesheet software? Or perhaps your computer is becoming slow and unresponsive? Don’t hesitate to use your line of credit for improving your business’s technology. Save yourself time by upgrading software, buying new programs, and purchasing updated computers and other tools that are necessary to running your business. You’ll find yourself feeling more productive when you have access to state-of-the-art technology, instead of outdated models. Plus, you won’t have to spend money on temporarily fixing old models that won’t hold up for long.
5. Purchase New Equipment
Most businesses require at least one type of equipment. For example, if you own a restaurant, it’s an oven, or if you run a construction business, it’s a tractor or loader. When your business has broken or outdated equipment, your productivity will likely suffer. In addition, it could put you and your employees in danger, or make it more difficult to provide the best possible to your customers. To avoid this, use your line of credit to purchase new pieces of equipment. Although it can be a considerable investment, it’ll position your business for the future.
6. Repair and Improve Your Facilities
Boost customer satisfaction by upgrading your business’s interior décor, bathroom, and other frequented spaces. Use your line of credit to fix that ugly carpet stain near reception or purchase comfortable couches for waiting areas (if applicable). When customers visit your business, they’ll be greeted with a comfortable, visually appealing environment, which will improve their overall experience!
Conclusion: Invest in Your Business’s Future
Overall, we recommend utilizing your business line of credit for ways that will help you increase sales. Whether it is upgrading necessary technology, hiring an all-star employee, or investing in marketing materials, your line of credit should enable you to pursue growth. Becoming complacent won’t earn you more customers and furthered success; you should always consider how you can improve your business. Luckily, with a line of credit, you can make these improvements a reality!
Editor’s Note: This post was updated for accuracy and comprehensiveness in December 2018.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.