How to choose a credit in the first year of your business
Finding financing for your business during its first year of operations can be the engine that helps you drive it. However, there are different factors that you must take into account so that the credit becomes your ally. Several of the big companies that you know were consolidated in the beginning thanks to small loans.
Jerry Baldwin, Zev Siegel and Gordon Bowker, founding partners of the Starbucks chain, started operations investing $ 1,350 each; shortly after they obtained a loan for $ 5,000 to acquire different coffee beans and diversify. Today they are the largest coffee company in the world and open a store every day.
Sam Walton, the founder of Walmart, applied for a loan to a relative to invest in his first store. When purchasing it, it focused its efforts to offer lower prices to its customers and managed to reduce the costs of its suppliers, achieving a 45% increase in sales during the first year. Currently with more than 2 million employees, it is one of the largest corporations in the world.
What do these big companies have in common? They used the credit for their benefit and implemented a clear strategy to grow their businesses. Before applying for a loan that helps you improve the productivity of your business, we recommend you take these 3 aspects into account.
1. Detect your business cycle
The stages that a business lives are birth, development, growth and sustainability. Be clear at what point you are will help you create a focused strategy to achieve success at each stage. The time each one lasts depends on each business and how you accelerate its growth.
2. Determine what and how much you need
Make a financial plan and calculate how much money you need and how you will invest it. If you want your business to be sustainable and not suffer from debt, be realistic. In the end it is money that you will have to pay at some point. I advise you that the strategy focuses on making your product stand out from the competition and generate value for the client.
3. Evaluate your options
Know the types of financing that exist and choose taking into account different factors such as the interest rate, the term and the documentation you need. Choose a loan that you can liquidate by analyzing the ability to pay for your business.
Remember that by making credit history on behalf of your business, you can have access to better rates and longer terms.