One way to start a new business venture is to obtain a series of startup loans to cover known expenses while working on generating revenue.
Determining how much to borrow starts with figuring out how much will be needed to cover the basics. Entrepreneurs can help themselves work this out by thinking about investing the borrowed funds rather than just spending money.
Investing vs spending is more than just a semantic issue. Spending money implies paying for things without any expected return. Investing is just the opposite. Investing is putting money into something with the eventual goal of getting something better in return.
The proper way to look at funding a new business venture with start-up loans is to frame the funding as investments.
With that said, here are five ways to wisely invest start-up funding:
1. A Professional Setup
Every new business venture needs some basic things to get started. An online business needs computers, mobile devices, and a productive website.
A brick-and-mortar operation will need all of those things along with office space, equipment, supplies, etc. The goal is to invest start-up funds in a set-up that projects a professional image.
The new entrepreneur should want to create a professional image from the very first day of business. A failure to do so gives the impression that the company is an amateur operation. That is a quick way to kill a new business before it ever gets off the ground.
2. Solid Marketing Strategies
The next thing to invest in is a set of solid marketing strategies. Entrepreneurs should look around for reputable marketing agencies that offer good, fresh ideas for promotion. Why? Because a new start-up is only as successful as its marketing.
Very few businesses explode overnight by way of a combination of word-of-mouth and mere chance. Most businesses succeed only on the strength of their marketing efforts. As such, at least a portion of a new enterprise’s start-up loans should be invested in marketing.
3. Cash Flow Management
A third area of investment is one that new entrepreneurs often fail to recognise: cash flow management.
What makes this particular investment difficult to wrap one’s brain around is the fact that you are not actually spending any money on it. Instead, you’re putting money away to cover future needs.
Cash flow is critical to long-term viability. A new company can generate lots of sales and grow its customer list pretty quickly. But if it doesn’t have the cash to pay its own bills, that company can collapse under its own weight.
A certain portion of funding from start-up loans should always be dedicated to cash flow management.
4. Strong Team Members
Unless an entrepreneur is planning to act as a sole trader, he or she is going to need the assistance of other people to get that business off the ground.
That person will want strong team members who share his or her passion and vision, team members that are capable of making things happen.
But guess what? These kinds of team members do not come cheaply.
Entrepreneurs have to be prepared to invest in the talent they need to succeed. Investing in strong team members now will pay off in the long run more often than not.
It’s a matter of getting the right people in place from day one, people who will be key participants in building a successful operation.
Finally, the modern business world thrives on technology. This is one area of investment that, although it can be expensive, is well worth every pound spent.
A portion of the new company’s funding should be dedicated to the kinds of technologies that will keep the organisation on the cutting-edge. Obviously, said technologies will differ from one company to the next.
Start-up loans can mean the difference between adequate funding and running out of cash before a new business starts generating sufficient revenues.
But in addition to securing loans, entrepreneurs also have to invest wisely.
Wise investments are the foundation of financial strength and future profitability.