One of the most popular uses for a small business loan is securing additional property. Your employees might be cramped together, demand might be skyrocketing, or you might need more space for some new equipment.
But before you take this massive leap forward, you must consider several potentially harmful outcomes of securing property you might or might not need at this time. Additional property should only be secured if you are 100% sure your business absolutely needs it and will experience a significant increase in revenue as a result.
Just because you’re ready to expand your physical presence doesn’t mean it will give your business the boost you’re looking for. Here are four things to consider before securing additional office space:
1. ARE YOU READY TO TAKE ON MORE FULL-TIME EMPLOYEES?
Unless you are solely looking to make room for new equipment or your employees are literally working on top of each other, securing new property goes hand in hand with taking on more full-time employees that will occupy the space. Not only is hiring more full-time employees a hefty, stressful investment within itself but there’s also a chance full-time employees might not be necessary for the kind of help you’re looking for.
Maybe you could accomplish whatever you have in mind with temporary, part-time or remote workers, neither of whom would require additional office space, full-time salaries and extensive training. It takes at least a couple of weeks to train new full-time employees, and your business might not be able to withstand the slowdown in operations that ensues while you’re busy training new employees. Consider what type of work you’re looking to fulfill. You might just need a hand with a single initiative that only lasts a certain period of the year.
2. SHOULD YOU BUY OR LEASE?
There are many pros and cons to either option. Leasing seems like the better option because it’s cheaper and you’re not stuck there if your business outgrows the space. Buying, however, may be your business’s key to obtaining crucial assistance when it is needed most. When you buy property, that property becomes a company asset that can be used as collateral for a business loan or the purchase of yet another office. Collateralized, or “secured” business loans can provide amounts up to $5 million along with low interest rates and ideal terms. Might your company need a large loan at some point in the near future?
You’ve already taken out a loan to secure this additional property, so you’d likely be able to receive a second loan in no time. A loan of this magnitude could allow you to run your business while tying up all of your funds in endeavors that will exponentially increase revenue and popularity.
3. IS THIS NEW LOCATION RIGHT FOR YOUR CURRENT EMPLOYEES?
One of the goals of any business owner is to encourage employees to stay at the office as long as possible. You can do this by providing a work space that is easily accessible, has working facilities, and comforting enough to foster a healthy mind. If there’s nothing available that fulfills all three of those qualifications, don’t risk jeopardizing productivity. Your employees might seek other options if the commute is long and expensive.
A problem with just one facility, be it the bathroom, air conditioner, refrigerator or Internet connection, could have a dramatic impact on morale. You want your employees to take as little time as possible settling in to the new location, so make sure there’s no surprises that could come up following the initial adjustment period.
4. DO YOU NEED PEOPLE OR IDEAS?
Sometimes, the problem your business has can’t be solved with a new batch of solid workers. The true key to expanding your business might not require another space at all. Maybe you don’t need people. You need ideas. You need creativity. You need to give your brand a complete overhaul in order to increase productivity and demand. So instead of using your business loan to secure additional property, consider launching a marketing campaign.
Such investments take time to pay off but if you fund it with a merchant cash advance, you won’t have to immediately begin making monthly payments after receiving a lump sum. This program deducts payments via a percentage of credit card sales (capture rate), so the majority of the advance will be paid back when your sales increase. All the manpower and extra work space in the world will not level the playing field if your competitors are investing heavily in marketing.
WE KNOW HOW IMPORTANT THIS DECISION CAN BE
United Capital Source specializes in helping businesses secure additional property to match dramatic rises in demand. Smaller companies often have the popularity to add property but cannot access the necessary funds due to the unique circumstances of their industry.
One of UCS’s proudest clients is the owner of a dance studio who needed to expand her business to accompany larger classes. The studio experiences drops in revenue during certain times of the year but she was able to add infrastructure and pay off the funding without jeopardizing cash flow or raising prices.
If physical expansion in your business’s near future, call 855.933.8638 or visit the UCS website. UCS funding experts are trained to know exactly how much you should spend on this major decision in order to ensure a prosperous future!