5 ways to use personal loans for business
So you’re thinking of (or currently are) running a business, and you’re considering taking up a personal loan to make your business better. It’s a good idea; let GoBear Malaysia provide some guidelines on the ways you can use personal loans to improve your business. Remember that the general rule of thumb is to spend it only on things that will enhance your business or make it more profitable over the long term.
1. Buy or upgrade core equipment, machinery and other physical assets
This very much depends on the nature of your business, but this is one of the major reasons why businesses might get a loan. If you’re in the printing business, maybe you’re looking to get faster printers and bigger plotters. If you’re in manufacturing, perhaps it’s your factory equipment. If you’re in the services industry, it could be your IT infrastructure and equipment. By increasing your capacity and efficiency, you can decrease your cost of production and produce more as well.
2. Get global standards certification
Depending on which industry your business operates, going for something like ISO certification can vastly increase your target market size. This is because more and more, not only international but local Malaysian businesses as well are looking to source products and services from suppliers of proven quality. By being certified compliant with global standards (many of which have Malaysian equivalents), you’re proving yourself to be one of those suppliers. But such certification can be costly, so this is where your personal loan can come in handy.
3. Increase marketing activities
Many businesses don’t succeed as fast as they could simply because they don’t spend enough on marketing activities. And no, it’s not just radio, TV or newspaper ads. Think about your brand image and logo. Consider the value of a professional website, Internet ads and other assets such as your letterheads, business cards and social media sites. Get some market research conducted. This will give you greater clarity and provide your business much-needed exposure.
4. Provide better working environment
Especially in the services sector, your employees are often your greatest assets. So it may be worthwhile to spend a little more on making their workplaces more comfortable. Get ergonomic office furniture, plan the office layout with a professional, have better ventilation and lighting. As always, make sure that whatever you spend on can last a long time, so your depreciation is lower per year.
5. Invest in high-yield investments
If you have an appetite for risk, this might be worthwhile. You have to consider how highly geared you can afford your business to be, but if you can find an investment that pays more than your interest rate, then you can make money from your loan! But be careful; high rewards usually implies high risks, so be sure you know what you’re getting into before embarking on this course of action. It may be that putting the money into your business as described in the 4 ways above will ultimately give you better returns (in the form of higher revenue) than investing it in risky financial instruments.
While we’re at it, just for a little light-hearted bit of fun, here’s what not to use your personal loan on:
1. Non-core corporate assets
Does your business really need a corporate car, or a chauffeur, or a time-share apartment? No? Then don’t spend money on things that don’t help bring in revenue. The same is true for moving to a new office and getting an expensive renovation done with plush carpeting, mahogany furniture and Johnnie Walker whiskey.
2. Operational expenses (unless temporary cash flow issue)
Running a business is an expensive proposition, unless you are in the service industry and you’re the sole employee. Your existing funding and income should be sufficient to cover operating expenses (sometimes called OPEX) on an ongoing basis, and any loans (including personal loans) to cover the shortfall should only be during emergencies or unexpected situations when cash flow is tight. Under no circumstances should you resort to using personal loans to cover your OPEX regularly.
3. Personal luxuries
You’ve all heard the stories. Instead of spending the money on the business, some unscrupulous entrepreneurs or businessmen decided to go on lavish holidays, or buy personal jets, or high-class penthouses and condos. Or spend it on their girlfriends/wives, or go partying. Yes; you can use your personal loan any way you want; that’s the whole point of having a personal loan. But if you’ve made up your money to use it to make a success of your business, then why waste it in this manner? Have patience; build up your business first and then enjoy the fruits of your labour later.
Know what you want to spend on, and are ready to start? Then why not compare personal loans at GoBear Malaysia for fast approval loans today?