Growing Your Small Business?


How your financial institution can help

If you own a business and you’re experiencing the growing pains that accompany any venture, you’re probably wondering how to get to that next level. Whether you’re on the verge of hiring employees, facing the need to move to a bigger space or at the point where you require an investment in equipment, your financial institution can help you in your decision-making process. You have many options available to you, which in turn can provide you with the opportunities to grow. Since growth usually requires money, you need to consider the different options you have for getting the capital you need.

Owning a business is your business

Lots of people go into business because they have a passion for what they do, whether it’s baking, painting cars or building decks. They soon realize that running a business is a different pursuit altogether and requires a completely different set of skills. One of those skills is money management: a careful eye on expenditures, the ability to cut costs without causing the product or service to suffer, and the knowledge to invest when it makes sense.

Securing a first-time loan

A small-business loan can provide the capital required to push your business into its next phase. Banks often cite increased risk as the main reason small-business loan applications are rejected, so starting the process by formulating a rock-solid business plan is key. Your own personal credit history is a major part of the process as well.

Adding to an existing loan

If you already have a small-business loan, you may be able to add to it. The likelihood of adding to that loan will depend on outstanding balance, the amount of time left on the loan and your payment history. If you are very close to paying off an existing loan, you may not have any trouble adding to it. If you still have a fairly large outstanding balance, however, or if the payments are already quite substantial, you may want to explore other options.

Entering into a partnership or combining businesses

There are always opportunities to partner with another company that provides a similar yet sufficiently different product than your business does. For example, if your landscaping business focuses on grass cutting and leaf removal, and another local business is more focused on landscape design, you both may decide that your businesses complement each other. Entering into a partnership means that the new partner will bring additional business, or even capital, with him or her. Either of these circumstances may provide you with opportunities to grow your business. Your financial institution may be able to help you integrate your finances under a single entity.

Capital investments

Knowing when to make capital investments for equipment or space is a significant part of running a small business. It’s the art of spending money that you’re confident can make money in return. Many businesses are at the stage where they can invest in new equipment, but others are wisely on the lookout for good deals in used equipment.

Similarly, as a business owner, you may be at the point where you require a larger or more visible location. It takes careful consideration to determine if that investment will pay dividends in the future and how long it may take to recoup such an investment.

Your financial institution can be a great source of information in determining whether such an investment is justified. They can also provide you with contact information for any trade groups that might be able to help. For instance, the American Bookseller’s Association provides an incredible wealth of information for booksellers, including the ABACUS study that tracks average growth margins, operating expenses and net profits, along with a full range of support services for small bookstores.

If you see the need to grow your business, start gathering income records, profit and loss statements, investment information, and any other financial information you think you may need.

Not only will doing this give you a clear picture of where exactly your business does stand, but this is the information you will present to your lender if you are considering any of the loan options mentioned earlier in this article. Your financial institution will need this information to determine how much you may be eligible for and to help you with loan terms and other things.

Once you have this information, we urge you to contact us. We will let you know if any other information might be required, and we can start you on your way to growing your business.

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