Every industry has competition. The same businesses compete for a pool of customers and hope to expand their market share. Effective marketing strategies, a great product, and quality customer service will help, but they can only take you so far. Most businesses borrow money to fund growth. A business line of credit or loan provides you with additional resources to invest strategically in your business. In addition, many businesses use leverage to reach new customers and sustainably expand their operations. We will discuss some ways you can use a business line of credit to grow your company and get more market share.
What Is a Business Line of Credit?
A business line of credit is a financial resource you can tap into at any time. A bank or online lender will assess your company’s financial health and let you borrow a set amount of money. For example, company owners with $50,000 business lines of credit can borrow up to $50,000. However, you don’t have to borrow right away. Business lines of credit have higher credit lines than credit cards. You do not need to use business assets as collateral for this financial product since it is an unsecured line of credit.
A business line of credit is a “just in case” reserve to cover business expenses. You will only pay interest when you borrow against the line of credit. Some companies obtain lines of credit and hesitate to use them right away. Having a business line of credit gives you a quicker path to additional capital since you won’t have to apply for a loan. Once you repay the business line of credit, it does not go away like a loan. You can continue borrowing against the line of credit even if you fully repay it. You won’t have to reapply to borrow the same amount of money from a line of credit. If you borrow small business loans, you will have to repeatedly apply for loans, which leads to more fees. Lenders will look at your revenue, credit score, and other factors before giving you a line of credit. Improving these numbers before applying for a line of credit can help you score a lower interest rate.
How Can You Use a Business Line of Credit to Grow Your Company?
Money gives you choices. Business owners can deploy each dollar into another area of their companies. When you borrow money from a business line of credit, you create more choices for your company that can increase your cash flow. Business owners can use a line of credit to fuel growth in the following ways.
Open a New Branch
A local business can expand its footprint in an area by purchasing another commercial property. This new branch will make your company more convenient for customers who live further away from your current location. Your company can also attract new customers who would have never heard of your brand or thought your previous location was too far away. A line of credit can provide you with the financing you need to open a new branch.
Purchase New Equipment
Companies need equipment to maintain operations and enhance productivity. For example, restaurant owners would need ovens, food processes, freezers, storage containers, and other equipment. An extra oven can reduce wait times and lead to a more pleasant experience for each customer. Some companies buy new equipment to expand, while others buy these assets to preserve current production. An oven can stop working and create delays in your restaurant. Buying a new oven is a necessary purchase that lets your business return to full production.
Hire New Team Members
Many hands make light work and expand your company’s reach. Hiring new team members can reduce stress on your existing members and help you serve more customers. You can also hire team members with specific skills you suddenly need. Some companies consider mobile apps to offer customers an additional solution. You may not know how to code, but you can hire a professional coder to create the app for you. If you don’t have enough reserves to hire a coder or feel nervous about your finances, a business line of credit can fill the gap.
Fund Advertising and Marketing Campaigns
Business owners need more awareness for their companies to gain market share and stay competitive. You can run discounts, attend local events, and use other strategies to gain awareness. Advertising and marketing campaigns are two of the most reliable ways to scale your company’s growth.
Advertising platforms let you target consumers based on their interests, age, location, and other factors. Business owners can input data in their advertising system that aligns with their customer avatar. Companies can scale profitable ads by increasing their daily budgets. You can refine your marketing pipeline and make changes to online campaigns in real time. Most advertising options do not offer this flexibility or access to as much data. As a result, businesses have an extraordinary opportunity with online ads and marketing campaigns. A business line of credit lets you capitalize on these ad networks and consider other choices as well.
Stock Up on New Products
Retailers have limited inventory and continue restocking products to keep customers happy. If a potential customer does not find what they are looking for in your store, that prospect may never revisit your store. Prospects can see you as an unreliable retailer if you have inventory issues. Stocking up on new products allows you to keep up with consumer demand and reduces the likelihood of unhappy customers.
Not every business has enough funds to stock up on new products adequately. However, these companies know that these same products can provide high profit margins. A business line of credit gives you the money to buy additional products. You can repay the line of credit after profiting from the sales.
Upfront Costs to Take on New Jobs
Business owners create job openings in their companies to address rising demand, new issues, and other factors. However, the initial costs of finding, recruiting, and training new employees can stall those efforts. Business owners can pull from their line of credit instead of waiting to generate enough earnings and allocating them for each step of the process. You can repay the line of credit over time and benefit sooner from a talented worker.
