Author David Hugo Hargreaves Growth Guru at Charterhouse: A family man and walker of the family dogs
Whether you’re just starting out or you’re ready to expand, external capital is required to make any small business profitable. Even if you do have your own capital to invest in your business, it’s likely you’ll need to take out a small business loan.
So, how do you use a business loan as efficiently as possible? It may depend on how big and in what industry your business is, however there are some things that you should always invest in:
1.Develop a Growth Mindset
Before you even consider borrowing money and growing your business you must ensure that you are mentally up for the journey.
I am talking about enhancing your Entrepreneurial mind and moving away from the ‘Artisan Mindset’. What do I mean by this? If you are still actively involved in the ‘doing’ what your business does, ie if your business is accountancy that you still handle clients accounts, if you are a commercial cleaners and your still holding a vacuum then you are still in the Artisan mindset.
If you wish to grow the value and profitability of your business then you need to move away from this as if your life depends on it. In fact your business life does depend on this because you will fail otherwise. You can teach yourself to change your mindset however this will take years, we suggest that you invest in a coach who can fast track you from being the artisan, doing the work, to being the entrepreneur driving the business forwards.
A great coach can make the difference between success and failure.
2.Invest in Experts
No man is an island and no man can create a successful business and retain a happy life on his own, period.
If you attempt to do other wise, you will fail to reach your full potential and your business will eventually fail anyway. Last but not least you will not be able to sell your business!
We suggest that your first expert is a general business coach. Someone with vast experience in business who acts as a coach because they love helping. Try and avoid ex bank managers because although they know enough to help a start up from day 1 until day 100, that’s typically their limit.
You should also consider a sales coach or part time sales director. These guys will help you devise a strategy and plan to maximise the number of people you serve and subsequently the profits that you make.
Once you have set up the model, started to drive in sales then the next expert you need is a part time Finance Director. Having a financial strategy and plan will ensure you maximise your profits, diminish your costs and enhance the value of the business
You will also need a relevant firm of solicitors, not least to deal with all your agreements. Make sure you source the right level and type of solicitor.
Of course you will need an accountant who is pro active and suits your level of business. Most of our clients have outgrown their current accountants and sticking with them is typically foolhardy
HR is a dirty word to most entrepreneurs however having an expert on board is something that will pay you dividends.
A pension expert will be able to ensure that you accrue your wealth as tax effectively and securely as possible. Be warned, IFA’s tend not be the type of pension expert you need because they are typically clueless when it comes to entrepenuers.
Charterhouse clients have all of the above experts available to them.
3. Keep Your Website up to date and relevant.
Your website should always be updated to give your customers the best possible user experience especially if they buy your goods through the site. Sometimes it’s just good to freshen up things a bit.
There are fewer things that give a worse impression of a company than an old, malformed website that doesn’t work. You could use your loan to hire a web designer to give your site a boost and optimise it to work flawlessly with the latest devices and browsers.
4. Social Media
Social media is the number 1 source of new clients and customers. To expand you need to invest in a social media company to management your social media activity. Unless you are really experienced don’t try to handle social media yourself!
Once you’ve purchased stock and your new website has been optimised to sales process, people are likely to start buying your goods or services. Spending some money to improve your marketing and communication is essential to improving your profits.
You can do this internally with better product photos, email campaigns, social media campaigns, SEO and online marketing.
6. Hire New Talent
You can use a small business loan to hire more staff. If you’ve invested in a larger warehouse, you’ll need more warehouse personnel to handle all new products. Perhaps you’d like to operate more internally and set up your own marketing team?
You can also use your loan to improve your employment process and find the best people for your business. You can also choose to hire a professional recruitment company to find talent for you.
7. Operating Costs
It may be that you have to spend some of your business loan on necessary things like office equipment, invoice balancing and electricity bills.
8. Systemising your Business.
Before you expand you must start to systemise the sales, delivery and collections processes. It is not ideal to have the systems ‘in your head’ Frankly this will lead to a constant state of chaos and your business is likely to fail. You will also need to invest in a CRM system to help support all your systems
9. Franchise your Business
Once you have systemised the business and you are acting like a true entrepreneur then it may be time to Franchise.
Franchising enables a business to grow at an exponential rate not just here in the UK but across the world.
You will of course need to take on a considerable amount of guidance or you will fail.
10. Expand the Number of Outlets.
Expanding your business means things such as opening another location or moving to a better location. Moving location may involve renting or purchasing more warehouse or office space, improving distribution, or expanding in a new market. Expanding the company can lead to a large increase in revenue.
A larger store will provide more space which means a larger variety of goods can be purchased at higher volumes at cheaper prices. Opening a store in the right place can double your income. Spending more on rent in a better location can give you access to thousands of more potential customers who pass your door every day.
Don’t forget that this will need financing and planned for well in advance.
If your company works with product sales, it’s an important investment to keep your stock well stocked. It is also important to expand your product range. It is also quick to get a return on investment through sales. Once you move into profits quickly, you can repay the loan quickly and avoid paying fees and interest.
Many retailers use loans to buy stock because if you have the capital available, you can buy large volumes of goods at cheaper prices. If you have access to capital, you can also take advantage of the purchase of goods and products that are only available for a limited period.
12. Refinancing of Other Debts
You can also use your business loan to refinance or consolidate other loans into one that has cheaper interest rates. Keep in mind that you don’t want to upset lenders who may invest in you in the future!
Whatever you choose to invest in your company’s expansion, you should always use a small business loan to create the growth. Please don’t ever use all of your own money to fund your growth because this is a sure way to poverty!
You can rely on Charterhouse for a smart, fast and uncomplicated business loan. We provide fast, easy loans from £10k to £500k – no collateral required. Our application takes less than 5 minutes to complete, and the average application is approved within one business day. You get the working capital you need in just one day.
13. Raise Equity Funding
Once you are becoming nice and profitable, now is the time to bring in equity debt provider. Naturally you would have grown because of other peoples money (loans) however you have just paid interest and not given away your assets (shares). Now that your business has a real value you may wish to consider raising further money by way of investors buying some of your shares. This is an excellent way for you as the entrepreneur to start growing your wealth.
Charterhouse has a wide spectrum of investors ready to invest in fast growth businesses who have typically followed the above advice.
Charterhouse helps entrepreneurs to grow their businesses and personal wealth whilst they retain their sanity. We have all the experts you will even need to maximise your potential and to minimise your risk
You can also rely on Charterhouse for a smart, fast and uncomplicated business loan. We provide fast, easy loans from £10k to £500k – no collateral required. Our application takes less than 5 minutes to complete, and the average application is approved within one business day. You get the working capital you need in just one day.
We would love to help you make your business vision a reality so Get in touch
Want to know more about how Charterhouse can make your life easier? Learn more the click here
Author David Hugo Hargreaves the Growth Guru at Charterhouse.
We help entrepreneurs to build sustainable businesses and make a difference in this world.