One part of this preparation is ensuring you have enough stock on hand to maximize sales and profits, and keep your customers happy and returning again in the future. If you’re like most retailers, the sales you take during the holidays will account for a significant portion of your annual revenue. With retail sales in the U.S. last Christmas up more than five percent to over $850 billion, this is an opportunity you really don’t want to miss out on.
As such, if you don’t have the cashflow necessary to buy enough stock to keep you covered over Christmas and New Year, it might be time to consider getting a loan to help you fill your shelves. This money can also be used to bring on more assistants to service customers, and otherwise cater to the increase in demand during the holiday season.
If you’ve never had to get a business loan before, though, the whole process can be a little overwhelming. To give yourself the best chance of success, and to ensure you don’t pay more than you need to, there are simple yet effective tips to follow.
Research Lenders and Loan Types
First up, spend enough time looking into the various lenders who could provide you with the funds you need. Don’t just go straight to your current financial institution or the one located close to where you work or live; instead, find the company that suits you best. Investigate the different types of loans available, too. Many financial institutions offer short-term loans to help businesses deal with a shortfall during a busy period. This kind of setup tends to involve less interest and other costs in the long-term, so it is worth considering.
Also, when it comes to lenders, keep in mind that while traditional banks are still good options, these days there are various other lender types to consider. There are boutique online-only firms, specialist industry-based companies, and more. Investigate your options to find out who’s most likely to approve your loan request and give you the best terms and conditions. Plus, be on the lookout for lenders that offer the kinds of features you require, such as easy online banking, the ability to pay loans off early, and flexible payment options.
Update Your Business Plan
Next, be sure you have a detailed, updated business plan to provide to lenders. Most firms will want to see your plans so they can tell if you’ve done your homework and know your industry and how you can make money, now and into the future. Lenders want to be confident you’ll have the capacity to pay back the loan on time, every month and a business plan helps them determine this.
Your business plan should show not only the standard items, such as information about your competitors, target market, sales and marketing strategies, and financial projections, but also details on how you’ll use the additional funds. Make it clear that the cashflow injection will be used to stock up for the Christmas rush and otherwise maximize holiday sales. Break down exactly where the money will go and how this will, in turn, boost profits.
Compile Other Paperwork
You’ll also likely have to submit copies of profit and loss statements, balance sheets, and proof of business assets and liabilities. Depending on the age of your business, its structure, industry, and profits, you may also need to provide paperwork related to your own, personal situation.
Don’t Get Greedy
To give yourself the best chance of having a loan approved, don’t get greedy. Only ask for the amount you really need to get through the Christmas trading season. Lenders are always more inclined to approve a lower amount rather than a higher one, and a final figure that seems reasonable based on your needs, so keep things pared back.
Since it’s challenging, expensive, and time-consuming to get more sales coming through the door, you need to take advantage of the busy times of year when customers are more inclined to spend. Getting a loan can be a good way to make this happen, provided you find the right deal.