Retail is one of several industries that is often stereotyped as being difficult to grow. Banks have traditionally been less-than-generous to retailers looking for business loans. While this stereotype is undeniably unfair and unwarranted, there is some truth to the notion that retail stores are increasingly likely to run into trouble as they expand. Radio Shack, Best Buy and Target are just a few retail giants that would likely be much more successful had they relied on drastically different growth strategies. In most cases, the fate of a promising retail business can be traced back to one major error: growing too fast.
To clarify, growing too fast doesn’t simply refer to the speed in which a certain initiative is carried out. What these companies failed to do was devote the proper amount of planning to ensure success.
Hiring Without Haste
Hiring is a necessary but costly endeavor. The time spent on searching for training new employees will likely hinder productivity. It will then take at least two-three months for the employees to begin chipping away at their own cost. Another four months will go by before the employees are actively contributing to your revenue stream and/or financing themselves. And this is implying that you’ve hired the right people at the right time in your financial cycle. Retail businesses are frequently prone to gaps in cash flow, partially due to large inventory purchases and delinquent payments from customers.
The amount of ways hiring can go wrong explains why more and more businesses are financing their teams with small business loans. Clients of United Capital Source have taken out short-term working capital loans, merchant cash advances, or business lines of credit to not only protect their finances while recruiting but also give themselves enough time to find good candidates for important positions. The only thing you should be sacrificing during the hiring process is time, as opposed to funds that are needed for bills, operations, or future, growth-related investments.
A Second Set Of Eyes On Your Budget
When companies are experts at opening new locations, the rewards can be incredible. But not everyone has the same luck as Domino’s. You’re going to have to do a lot of planning, and not just in regards to your finances. You have to research your new competitors, the potential for street and foot traffic, and how much staff you’ll need for each stage of the location’s development. Then there’s the possibility that for your type of business, multiple locations can do more harm than good. This isn’t just based on industry. It also depends on whether or not a service provider handles most billable work, or whether or not your business revolves around plug-and-play skills.
With so much logistical preparation to do, wouldn’t it be amazing if it was up to someone else to make sure you had enough money to last throughout this entire ordeal? At United Capital Source, we don’t just put money in your bank account and call it a day. Especially when it comes to game-changing investments like a new location. In such situations, we will help you develop and maintain a reasonable budget and plan for unforeseen expenses that may (and probably will) arise. SBA Loans and revenue based business loans are just a few ideal options for long-term investments of this nature.
Testing The Waters Before Diving In
In some industries, businesses can succeed by sticking to one thing they do very well. In retail, however, most businesses must continuously adapt in anticipation of market changes. They must diversify their offerings, reach new audiences, and ultimately introduce new streams of income. But you can’t just do this at anytime nor expect those streams to open up as soon as possible. Big moves must be made carefully. Before launching a new line in full force, retailers should consider testing the waters when there isn’t much to lose. In the slow season, you have more time on your hands and can actually study the response to a new line. Sales are down already, so it’s not like you’ll be turning away valuable customers by offering something different.
But since you barely have enough money to pay your own bills, this is the perfect opportunity to pursue a working capital loan. Payments for a merchant cash advance are directly tied to credit card sales and would therefore be smaller during slow months. You would theoretically pay off the majority of the debt when sales jump back up the following season, which shouldn’t be hard thanks to your enhanced knowledge of your target market.
It’s Okay To Need Help
This might be a hard pill to swallow, but many companies that didn’t achieve sustainable growth were unable to accept that they needed help. One of our primary goals at United Capital Source is urging potential clients not do the same thing. Small businesses that do indeed achieve sustainable growth are well-aware hat their chances for success are exponentially higher when they aren’t alone. We are happy to provide as much financial guidance and advice as we can to all – yes, all – clients of United Capital Source. You might not get the business loan of your dreams right away but if you make the effort to ask us questions, you will have little if any reservations about your desired investment.