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6 Reasons Why Home Improvement Contractors Need Business Loans
If you love doing home improvement contracting, but don't necessarily love the amount of money or profit your making, it might be time to look at your business and consider if a business loan might be the answer to what's holding you back or just the door that opens you up to new growth. Keep reading into the following paragraphs to learn 6 reasons why home improvement contractors might need business loans at various points in their professional work.
1) Business growth: Any expansion of your home improvement contracting business is going to involve costs and increased budget. Your current cash flow might not be enough to fund the higher level of operations you're looking at building up to. Even if they are, there might be things that you didn't account for in your growth plan, such as taxes and fees, or fixing a project gone bad. Likewise, you might even have pleasant surprises like more business than you can handle. A business loan is a good insurance policy to fall back on in all general growth cases.
2) Marketing matters: You should always be Marketing your business. However, you really have to be Marketing if you are just starting up and no one knows you exist, or if you're looking to grow from your current level of business. In those cases, though you're looking to make more money because you don't have enough, and while Marketing done right makes money through new business, projects, and clients, it also costs money to do. A business loan gives you a way to get the Marketing done and survive until the Marketing pays itself back.
3) Maintain or boost your inventory: How much supplies, hardware, and equipment you keep on hand might vary depending on your market, your storage space, and the specific projects you do routinely. However, should a nice juicy large project or client come your way, you might suddenly need a lot of things to do the job, but you're not going to get paid for any of it until after you're already either using them or totally done. A good business loan can be just the ticket to unlocking this logjam, so that you have the credit and cash flow that let you tackle the big money makers without worrying about one of your crew members explaining a declined card at the supply store you run to every morning.
4) Access volume discounts and special deals: Along a similar thought to suddenly having projects you need materials for, you also want to be able to pounce on opportunities when they strike, such as buying high volumes of things that you'll eventually need, just possibly not right away. This could be taking advantage of materials and supplies being discounted at the end of a season so you can warehouse them for next year, discontinued machines being firesaled, online specials that you have time to wait on shipping for, and even foreclosures or going out of business sales from failed competitors. The right business loan can mean filling a storage facility full of great tools, premium supplies, and still-useful machines at a fraction of the general retail cost. The savings can add up for months or years, when you're able to dance when the lightning strikes instead of wishing you could take advantage of another missed opportunity.
5) Hiring employees costs money: You can actually sink a surprising amount of money into an employee before their productivity ever makes a dime for your business. The time spent on human resources, advertising openings, interviewing, training, and doing background checks and drug testing all costs money on top of the hours put in. If you're looking to grow your workforce, or suddenly have to come up with new crew members outside of your normal cash flow, you might need financing to handle your expansion or just maintain staffing levels if others are suddenly not available.
6) Establish open cash flow: There are going to be times where your business needs to be spending cash but does not have a lot of it coming in, if any. Home improvements and renovations are often a seasonal thing, with a lot of work and construction happening from early spring until mid-fall. If you're good at what you do, you might secure business through the winter, but you could also be facing possibilities where your work is ramping up before you're getting paid for your services. You still have to buy supplies and pay your workforce, and a bridge loan can help you through such a squeeze, which can happen when you first launch your business, every spring, and sometimes after big storms.
Now that you know these 6 reasons why home improvement contractors might need business loans, stop to consider if any of them apply to your own business endeavor. If so, analyze your budget and company credit for what kind of business loan you might be able to afford, but also what size loan you your business needs.