Is a Business Loan a Good Idea?

If you have a business then it may be that you have had a loan in the past or are considering one now. A loan can be a great opportunity to expand your business or to start one up but there can be drawbacks to having one. It is good to think about how it can benefit the business, but it is all too easy to forget about the risks that you are taking with a loan. It is worth evaluating the pros and the cons before making your final decision.

Repayments

You need to think hard about whether your business will be able to afford the repayments. You should be able to find out how much the repayments will be before you sign up to the loan. You then need to think about whether you will have that much money available each month to be able to make those repayments. If you are an established business then you will be able to look at your accounts in order to find out whether you have enough spare money each month in order to make those payments. If your income varies then this could mean that you will be taking more of a risk than if you have a constant income. If you are a start-up business then you will not know whether you will make enough. However, you should have put together a business plan and predicted how much money you may make. This is usually necessary in order to apply for a loan and so you will be able to use that to work out if you can manage the repayments.

It is always good to have a backup plan as well. Even if you are completely confident that you will be able to repay the loan you will need to think about what might happen if you have a month when you cannot make a repayment. It would be wise to have a savings account that you can draw form or consider whether you have any other income sources that you might be able to use.

Limited future spending

If you need to find a loan repayment each month then it will mean that you will have to be really careful about how much you are spending during the course of the loan. This means that if you need to buy things for your business, then you may have to delay doing so. This may be okay if it is something that is not urgent but if it is something that you really need or that will make a significant difference to your business then it could have a big impact. You may think that you can just borrow more money, but this will mean that you will be repaying more each month which you may not be able to afford. You will also be limited in how much you can borrow and you may just not be able to find a lender prepared to lend you more money.

Risk of bankruptcy

If you do not manage to make your payday loan repayments then your company could go bankrupt. You might think that this will be okay because it is just a business going under and you will be able to walk away and carry on, perhaps starting a new business or getting a conventional job. Howeber, it is just not as simple as this. It is hard to imagine bankruptcy when you have a great business idea or your business is doing well but you do need to make sure that you are prepared If your business does go bankrupt and you are a director or the sole trader or a partner then it reflects on you and your credit record as well. It will mean that your personally will not be able to get a loan, mortgage or things like this. You will have the guilt of not paying what you owe and you will have to repay it all anyway, the debt is not just written off.

So although a loan can really lift your business or get you going, it is worth being cautious. All loans have a risk and you need to make sure that you will be able to repay it and that you will be able to manage to buy all of things the business mean as well as cover the cost of those repayments. Obviously there can be lots of benefits as well and it may be that you cannot start the business or expand without borrowing money. As long as you are aware of the risks and you work hard to make sure that you make the repayments and are sure that you will be able to continue paying into the future then you should be okay. Having a backup plan just in case repayments get tricky can also be a very wise thing to do.

How to Make a Profit Buying and Selling Items Online

There are lots of ways that you can make money online and buying and selling things is a popular option. There are many places where you can sell things and this is partly why it is a good option for many people. It is also something that many people can do as you do not need any particular qualifications. You will need to be able to calculate the costs so that you know how much to charge in order to cover those costs and make a profit. However, knowing the price is not the only way to make a profit. You need to do a lot more things as well.

Select the right products

It is really important to make sure that you select the right products to sell. You need to choose items that will sell well, will make you a profit, can be easily stored, packaged and delivered. This can be a tricky decision to make. Storage can be a good place to start thinking about. If you want to store the items at home then you need to decide where you will store them and decide how big the items can be to fit in the space that you have for them. Remember that you may need to have quite a few items and you will need packaging for them if you are posting them to people and will need to store that as well. You will also need to allow for the fact that you might want to expand the range of items that you are selling and so may need more space and you may want to stock up at certain times of the years, perhaps at Christmas depending on what you are selling.

Choose the right price

As mentioned previously you will need to pick a price that will allow you to cover your costs and make a profit. However, how big that profit is something that you will really need to think about. Obviously you want to maximise it if you can but if you charge too much then you could risk people not buying from you because you are too expensive. A higher price may make something seem better quality and more desirable for some but people may buy more if it is cheaper and more affordable. It will depend on whether you have a product that you are trying to sell to a high end market or to a lower end market. It is worth looking at what other people charge for similar items so that you can see where you can fit in. You might want to undercut them so that you can sell more or you might want to have a better quality product and charge a bit more.

Find customers

Once you have decided what you are selling and how much for you need to find customers. It is easy to assume that once you have items available for sale in a shop that they will then be bought. Sadly this is not the case and you will need to promote those items so that people buy them. They will not just find them or come across them but you will have to make sure that they actually know that they are available. Even if you sell through a platform such as eBay or Amazon you will have a lot of competition and you will need to make sure that customers are aware that you are there. This means that you need to consider whether you will advertise. You can obviously pay for advertising but there are also things that you could try for free such as having a social media page, getting an article in the local paper, registering with search engines and things like this. It is possible to find articles online about how to do this and so this can be really useful as you can find out for free about how to advertise for free.

Sell add on items

Once you have started making sales, then it could be worth thinking about some add on items that you can sell alongside them. For example, if you go to a toy shop and buy a toy that needs batteries the shop will try to sell your batteries at the till. You can be more subtle that this but there are opportunities to sell similar items that people may want to buy alongside the things that you are selling. This will be convenient for them and will give you the chance to make more profit. Think about what sorts of things might work and also look at what your competitors are doing and pick up tops form them. Try to sell a few different things to them though so you stand out but do be careful to make sure that they will be things that you will be able to sell.