4 Ways that Small Business Loans Can Increase Leverage and Profits

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Friday, September 22nd, 2017

Often, the most important — and indeed profitable — word in the business vocabulary is leverage. This is because with enough leverage, businesses put themselves in a position to exploit favorable opportunities, and just as importantly, shield against risks and threats.

However, most businesses do not have a patent, monopoly, or Apple-like brand equity (and billions in working capital!), which enable them to set terms and call the shots in their marketplace. Fortunately, there is another road to the business leverage promised land that is far more accessible: small business loans.

Indeed, small business loans can do much more than cover urgent or unexpected expenses, such as paying for building or vehicle repairs, covering seasonal revenue shortfalls, adding inventory during a seasonal spike in demand, and so on. They can — and frankly, should — be used to boost leverage. Here are four ways to make this happen:  

  • Negotiate Better Terms with Suppliers and Vendors

Small business loans enable businesses to buy more from suppliers and vendors — which translates into increased leverage to negotiate better terms. This can mean bigger discounts, more time to pay, and additional value added services (e.g. faster shipping, access to exclusive promotions, first priority when buying limited inventory, etc.).

  • Onboard and Retain Top Talent

On today’s business landscape, the war for staff can be more relentless than the battle for new customers. A small business loan gives businesses the ability to “compete with the big boys” in their marketplace when it comes to onboarding and retaining top talent.

What’s more, this may not necessarily mean the need to offer a more generous compensation package. It could mean investing in leading-edge technology or systems that lure top performers away from enterprises, so they can make a major and meaningful contribution vs. play politics and engage in cubicle warfare day after day.   

  • Add Product Lines

Adding new product lines is an effective way for businesses to diversify revenue streams and enter new markets — both of which are essential for growth and stability. A small business loan provides businesses with the leverage they need to modify and evolve their suite of offerings, and put themselves in position to succeed over the long-term.

  • The Ability to “Walk Away” from a Deal

Obviously, businesses who sell products and services need to connect with customers who buy them. However, as is often said in the world of professional sports, sometimes the best deals are the ones that aren’t made. Translated in a business context: small business loans give businesses the leverage they need to “walk away” from a deal if the margins are too thin (or non-existent), or if customer demands and expectations are unreasonable or impractical.

What’s more and rather paradoxically, businesses that have the leverage to “walk away” often find that their customers are much more reasonable and fair. Just as bees can sense fear, customers can sense desperation.

The Bottom Line

While every business is unique, the most successful and profitable aren’t necessarily — or even often — those that offer the best products or boast the best prices. However, the unifying asset that they all share is leverage: because that’s how they create success rather than chase it.
To learn more about how a small business loan can help you take advantage of opportunities such as the four above, download our latest eBook “7 Profitable Opportunities that You Could Miss Without More Business Funding” today:

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