Growing your business so it can compete in larger markets effectively is one of the biggest challenges to owning a small company
. It takes diligence, patience, and a mastermind-level sense for planning. One of the biggest hurdles for many companies is working capital, so learning to raise that capital quickly is important. Many companies turn to lines of credit to manage growth as a result.
Credit lines are reusable, they can fund multiple growth moves at once if the budgets line up, and most importantly, they’re quite affordable. So, how can you use them to grow a business? Here are a few ideas.
1. Invest in Bigger Marketing Campaigns
If your operation is not operating at peak productive capacity yet, it’s time to raise demand for your goods and services so you’ll have the income to make expansions. That’s the first step, so that’s what you can use as a credit line to start with. Take out the balance needed to invest in a big marketing push through current channels or use it to hire a consultant to take the helm and bring you the returns you need. Either way, it allows you to kick off a big campaign and then pay for it with the revenues from your increased sales.
2. Hire More Staff
When demand picks up, you’ll need to make sure you have the people to meet it. Assuming you already have the equipment to come up to capacity, the next step after marketing is to hire the new staff you need to meet demand. If you’re anticipating a temporary or seasonal demand, then hire accordingly. Your lines of credit can absorb the increased payroll until the labor you’ve added yields a return for your company.
3. Expand Your Capacity
For companies that have already marketed to bring in new customers and staff up to the point where current operations are producing at capacity, the next step is to actually grow. If you’ve gotten here without a credit line, that’s fantastic, and your credit line can take you further since it’s free to provide the capital you’ll need to add more machines and the people to run them. If you have the right credit limits, it could even finance an expansion of your facilities or the acquisition of a secondary shop.
Since business lines of credit tend to be secured with assets like real estate, it takes a high-value property or several of them to raise all the funds needed for a new building. Credit lines can provide much-needed down payment money; or renovation money even if the balance does not cover the entire acquisition, though. Keep that in mind as you plan the next phase of your expansion strategy.