The cosmetics industry has been on a powerful but strange trajectory over the past decade or so. There are more beauty brands than ever, yet the business is arguably more competitive than ever as well. In order to survive in today’s climate, virtually every cosmetics store has to have something special to offer. This leaves smaller businesses in a challenging predicament. The need for additional business funding is almost certainly on the horizon, but they aren’t sure exactly how to use the money. Or whether they’ll be able to qualify for the amount and terms that pose the least danger to their already-tumultuous cash flow.
A logical starting point for this decision is figuring out which investments make the most sense to finance with a small business loan, as opposed to some other type of financing. Here are some great opportunities for small business loans geared towards small cosmetics businesses:
What is influencer marketing?
It’s completely understandable to question the longevity of certain trends and strategies. The increasing role of digital marketing in the cosmetics industry, however, is undeniable. Ask any beauty entrepreneur about the future of cosmetics, and the first answer will likely involve influencer marketing and social media, which go hand-in-hand. The original influencers were celebrities who only advertised big-name brands. This is no longer the case. You don’t have to be famous to be an influencer, especially when it comes to products like clothing or makeup. Influencers are therefore much more accessible to smaller businesses. They just have to know where to find them and how to tell just how effective a potential business partner will be for their audience.
Yes, you could just find and pay for influencers yourself. But unless you’ve spent the past few months sifting through Instagram profiles or have a background in marketing, you’ll be approaching this crucial investment with very limited knowledge. This is the kind of investment where you must absolutely sure you’re spending the right amount of money on the right people. In these situations, seeking help from an expert is worth every penny.
Leave it to the experts
In addition to Facebook ads and Google ads, many private digital marketing agencies now offer influencer marketing services. They work out reasonable deals with influencers, which isn’t always easy because a great deal of them have a reputation for overvaluing themselves. And these agencies work quickly: you could see an increase in leads and/or sales within a matter of weeks. As you can see, this is one of the best uses for a cosmetics business loan in 2018. The challenge is arranging terms that allow you to pay your digital marketing team every month despite the occasional dips in revenue experienced by nearly every cosmetics store.
One solution is a merchant cash advance, largely because cosmetics stores typically perform regular debit and credit card transactions, even when business is on the slow side. Unlike other business funding programs, consistent cash flow is not a primary requirement for a merchant cash advance. You could essentially begin your influencer marketing program about four or five months ahead of your busy season, when you’d be making small payments to your business lender as well as your agency. By the time interest in your industry reaches its peak, your agency will have determined which influencer strategy is most effective.
Popular today, on your shelves yesterday
The ongoing cash flow problems associated with cosmetics are primarily due to changes in demand. Trends seem to come and go at the drop of a hat. Companies have adapted to these changes by improving their ability to forecast them. You have to know what’s going to be popular before it actually becomes popular. The latest hit should have been on your shelves well before social media takes notice. This might not be an issue were it not for seasonality and the aforementioned dips in revenue. Cosmetics stores must make sure they are not only able to purchase new products at any given time, but also have them delivered quickly.
Businesses that are frequently prone to temporary income shortages are often recommended to seek business lines of credit. With a business line of credit, you are always able to purchase orders of hot items that will bring in more revenue shortly after. And in any industry, if you want consistently speedy deliveries, you’ve got to maintain a good relationship with key suppliers. A business line of credit ensures that you’ll be able to place orders at the frequency and size, no matter what season it is. This will create a reliable supply chain whilst making you eligible for discounts, since you can now place orders at times when your competitors cannot.
Multiple partnerships for the price of one
Odds are, your competitors are already looking into both strategies as well as how to finance them. Only you, however, were lucky enough to discover United Capital Source, which offers repayment structures that will never prevent you from running your operation as usual or force you to sacrifice one strength to gain another. A partnership with UCS is a commitment to staying ahead of the game, which just happens to be our top priority in regards to the ever-evolving business financing industry.