Retail can be a tough industry. You have the expenses associated with a typical brick and mortar business, plus additional competition that stems from the Internet. Further, in order to have a steady stream of sales, you have to ensure your business is well-stocked.
More than one retail shop has gone out of business because the cash flow out of buying stock didn’t mesh well with the cash flow in of selling it. Even with many vendors offering 30 to 60-day terms, and merchandise return offers, the time to profit can be long enough to make running a retail business difficult. Until recently, there wasn’t much to do besides set up a cash reserve.
Online lending has since become a viable option for business lending, meaning the retail business is about to get a lot easier. Online lenders offer loans and lines of credit specifically geared towards retail businesses. Here are a few of the ways this lending option can help retailers grow their business:
There are two ways to do retail: you can buy what you can afford to stock and gradually increase your holdings until you’ve become a fully functional store or you can buy a lot of equipment up front and make a big entrance so people take your shop seriously from the start. Unless you have investors with deep pockets, the second option is often out of reach. Traditional lenders aren’t typically open to giving credit to a new or struggling retail shop, but online loans are within reach and provide retailers with the cash to start out strong.
Riding the Wave
Retail business is subject to seasonal waves that are a result of times like holidays or vacations. There are also regional or global economic waves that can make an impact on the retail industry.
No matter the wave, there are two kinds of retail businesses that have to face the ups and downs:
- Those that have enough money as their business begins to fund the addition of more inventory, better advertising and additional staff
- Those that have to wait for the new income of the better times before they can invest in growing to catch up with the new economy
If your business does not fall into the first category and you don’t have the funds on hand, online lending can provide them and give you the funding you need to ride the seasonality and economic waves.
Making it Through Lean Times
Retail is sometimes a “feast or famine” proposition, with famine causing two problems for small businesses. The first problem occurs in the short-term. In the short term, slow seasons tend cause a store to close because funds just aren’t there to keep the doors open. The second problem occurs in the long term, when businesses with thin cash reserves lack the money to leverage new opportunities. They lag behind better-funded competition and close just as times become easier. An online loan can help retail businesses solve either or both of these problems.
One of the great things about marketing in the 21st century is how data-driven and responsive marketing is. Retail marketing can therefore be very powerful if properly-planned and executed. The biggest shops and most national brands tend to have an advantage when it comes to marketing, as they tend to have the operating funds to execute large marketing initiative. Borrowing online gives the little guy access to marketing money at the right time, allowing them to stand out even against larger competitors. Obtaining something like a revolving line of credit can help these retailers “double down” on the most effective methods once they analyze the data from their first round of funded marketing.
Retail sales in a physical shop are limited mostly by the size of their showroom. Many retail operations get stuck in a stagnant spiral where they could make enough money to afford larger space if they had the larger space, but they are never able to achieve those expansion funds with the showroom funds they are receiving. An online loan can make that expansion a reality and can ensure those retail businesses can continue to afford the expansion thanks to the extra profits the additional space will permit.
Borrowing the right amount of money at the right time for the right reasons is key to success in any small business, and this is truer of retail than almost any other industry. You are on your own for making sure you only borrow for the right reasons, but online lenders make obtaining the right amount at the right time easier now than at any other time in the history of small business lending.