 Many different situations can prompt small businesses—even well established ones—to consider applying for a short-term loan. The popularity of this financial product has steadily been on the rise—between 2012 and 2013, the amount of short-term credit loaned by non-bank lenders doubled from nearly £1.1 billion to just over £2.1 billion. But what exactly does this mean for small businesses? Much like its other financial counterparts, a short-term loan has its own pros and cons and doesn’t suit every scenario. In some cases, it can even be harmful. Small Business Advice Week has a few tips that will help you determine when to go for this option. 1) What is a short-term loan? A short-term loan is traditionally interpreted as a quick infusion of capital that is repaid over a year or less. While this type of finance can serve a range of purposes, its most common use historically has been to tide businesses over when they’re experiencing a drop in revenue. However, Philip Hargreaves, Head of Access to Finance, claims that the growth of the alternative lending industry is changing the game. “Fintech and alternative finance is supporting the maturity of the short-term industry,” Philip says. “Short-term lending has grown up from simply being a bridging loan.” Businesses are now turning away from the idea that short-term finance is the option only when sales are low. The new scenario, according to Philip, is when businesses are experiencing rapid growth. “There’s a conception that if a business has short-term cash needs, it’s in trouble,” he explains. “Of course, while this is true in some cases, a lot of small businesses are looking for capital injections to manage fast growth or to finance a business opportunity.” 2) How can a short-term loan help your business? Before applying for any kind of finance, it’s important to work out the reason for the loan, as well as how this addresses your business needs in the long term. “Short-term loans suit growing businesses that need an immediate boost of cash. These businesses may need more working capital to gear up towards a new contract, or to take on additional staff to cope with workload.” This situation can apply to businesses that need fast capital injections that they know they can repay reasonably quickly, i.e. gearing up for the busy season. Some experts recommend following the rule ‘don’t finance long-term needs with short-term money’. For example, a short-term loan would be better suited for buying inventory or making a vital repair instead of financing significant equipment purchases. “Kit or equipment might be better financed over its life cycle, rather than through a short-term loan,” Philip recommends. 3) What are the the pros and cons?
Knowledge is key in reaching the best decision for your business. When comparing long-term and short-term loans, consider factors like these: The price of the loan: While short-term loans tend to be available more quickly and easily, their interest rates are also generally higher than that of long-term loans How soon do you need funding: Long-term finance will take considerably longer for assessment and approval Are you willing to put down collateral: Short-term funding is more likely to be unsecured, with no need for a personal or director’s guarantee Carefully consider your options and work out what the opportunity cost of not accessing finance straight away would be. For example, a supplier has offered you discounted inventory, but you don’t have the working capital on hand to immediately respond. Calculate the amount of revenue you would lose if you didn’t take this opportunity. If the loss is greater than the total cost of the short-term loan, including interest payments and set-up fees, it could make commercial sense to apply for a loan. While business financing isn’t an exact science, following some core principles will help you take the most strategic approach. Both short and long-term loans can help your business grow, and investing time in research will give you the best results. As Philip says: “Finance your needs in the right way with the right advice.” This article was written by Stephen Whelan, Business Relationship Manager at Spotcap UK. With the arrival of each new year, we all get a fresh start. The same goes for small businesses and their hard-working owners. Regardless of annual turnover or industry, all businesses benefit from implementing time and money saving procedures. This is especially true for small businesses that are run by first-time entrepreneurs, who may be learning as their business progresses. So Small Business Advice Week has five effective hacks that will save you time and money in 2018 and beyond. They may seem simple, you may never have considered them prior to today, but these tips and tricks are sure to make a positive impact on your working life and your business.
There is a very good reason why people tend to describe checking your phone and social media account as addictive – and that’s because it is. The chemical responsible for compelling you to seek out instant gratification is known as dopamine, and dopamine is partially stimulated by anticipation. Therefore, you may feel as if you need to repeatedly check your email even though you may have no new notifications. When checking social media and emails stop being legitimate work tasks and become more like a vicious time-wasting cycle – you need to get tough on yourself. Check your emails at pre-planned intervals only – at 9:00am, 12:00pm and 3:00pm for fifteen minutes or less, for example. If possible, delegate and assign care of social media to another member of staff or implement the same strict system of checking social only at pre-arranged times.
If you have a business blog, you can write your posts ahead of time and then schedule them to upload at a staggering pace. Automation can potentially save you money as well as time. If you arrange to pay your bills using the ‘set-and-forget’ method, you’ll never encounter a late fee.
It’s completely free to post your task, and once you have done so, you simply assign the work to the most suitable ‘Tasker’. With Airtasker, you can confidently hire flexible staff with verified reviews in a matter of minutes, and their services are insurance covered! Pocket Pocket is an app that links back nicely to our earlier tip on social media usage. How often have you come across an article, video or link that interests you, but you don’t have to time to view it at your leisure? Pocket allows you to save the material all in one place, and it syncs across all your devices. That way, you can catch up on content wherever you may be. Evernote Evernote is the ultimate organisation app. You can take notes, and save them in a variety of formats, use your camera to scan and digitize paper documents and collaborate with others. This app also syncs across devices, so you’ll always have your important material close by. Dropbox Dropbox is another fantastic time-saving app. Dropbox allows you to smoothly collaborate with others as you sync and share Word, Excel and PowerPoint files. You can comment on files to share real-time feedback with your team members. Dropbox also contains the document scanner feature, which is handy for digitising receipts and meeting notes.
Digital files must be saved under an appropriate name. Saving an image as ‘IMAGE34’ is going to come back to bite you when you can’t locate it later. Always back up digital files onto external hard drives in case your computer system goes down. An organised filing system can ultimately save your business money – because you can’t lodge a tax deduction if you can’t find the receipt!
When we commit to running a small business, we often so badly want it to succeed that we fail to see the forest from the trees. As 2018 progresses, take a step back and assess your business practices, then make changes that will help you make strides to where you want to be.
Virtual Assistants can be a great help to small businesses, keeping you on track, generating new contacts, and making sure your business is running smoothly. Small Business Advice Week looks at what virtual assistants are, and how they can help you. What is a Virtual Assistant? There are quite a few different descriptions and jobs that Virtual Assistants (VAs) do but I’m going to concentrate on the Virtual PA. They generally handles the PA and admin tasks that were traditionally carried out in the office. A VPA works remotely from their home office but is closely connected with the companies they work for. They support a variety of different clients in a diverse range of industries in the UK and overseas. They can be an essential right-hand person for a busy businessman who is often out of the office working on the move between meetings and while travelling. What can a Virtual Assistant do? A range of tasks can be outsourced to a VA that free up time for the business owner to concentrate on fee-earning tasks and meetings. Typical tasks include leaving the diary management and appointment scheduling to the VA as the sharing of calendars makes this easily workable. The VA has more time to enter in details of locations and directions and make changes which can happen at short notice. The time-consuming task of liaising between busy business owners to agree meeting times and places is left to a reliable VA.
How Virtual Assistants can help your Business VAs are usually self-employed and therefore as your business expands you can hire a VA without needing to employ an assistant on a permanent basis. Office space is not required as they work at home and have their own equipment. Terms of Business can be discussed and agreed with the Virtual Assistant as to how many hours per day or week are required and for which responsibilities. Either an hourly rate or a project-based fee can be agreed. VAs are usually flexible on time and deadlines can be set. Having a VA to rely on when you are otherwise engaged or travelling is a great advantage. It can mean important phone calls and business opportunities are not missed. The Virtual Assistant, just like with a traditional Personal Assistant, gets to know the clients of your business and becomes the go-to person for information. He or she can make a positive contribution to your aim of growing and expanding your business and will be valuable asset to your company. This post was written by Mary Cumberlege at Vector Support.
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