A business line of credit can be a powerful tool when it comes to expanding or maintaining your manufacturing company. It gives you the freedom to make the investments you need to, when you need to, so that you can provide your customers with the products they need. Updates to tax laws have also made capital expenses even more attractive to businesses, providing further incentive to use the resources at hand to their fullest capacity. Here are some different ways you can use your working capital.
1. Upgrade equipment
Machines break, tools fail. You can’t afford to have unscheduled downtime because of mechanical issues. Investing in preventative maintenance and replacing or upgrading the things you need to make your products, before a critical failure, is wise. It also helps prevent liability and Workman comps suits against your company. Make sure to consult with your accountant about making the capital expenditures, because you may qualify for certain state and federal tax rebates, depending on the nature of the upgrade.
2. Hire more employees
More hands on deck means more opportunities to build your business. Whether you are looking for more people to work on the factory floor, a new salesperson, or a social media marketing manager, having more staff means you have the labor you need. It also means you have more payroll to meet. While you are waiting for your investment in people to come through, you can start paying them with a revolving line of credit.
3. Explore shipping and handling options
Have you ever received a small item from Amazon in a ridiculously large box? While it may seem wasteful to you, it actually saves the company millions in shipping costs. Each truck is carefully packed with precisely sized boxes to save on space and gasoline. The cost of the box waste is minimal in comparison to the annual shipping savings. Your business may not have the same volume, but there are most likely material investments in your shipping and handling process that could be made. From buying packing material in wholesale to investing in an electrical delivery vehicle, just a few changes could reap many rewards.
4. Ramp up for the busy season
Is Christmas coming up? If you know that demand rises for your product during certain seasons or events, making sure you have stock on hand to fill orders is a necessity. You’ll also want to make sure you have marketing campaigns in place to let customers know that you are ready to meet their needs in a competitive fashion. It’s also a good time to test your website and order systems to make sure they can keep up with the orders.
5. Bridge the gap during slow times
All businesses have cycles, and if you are in a slow order time, you could feel the pinch when paying your monthly payroll. Layoffs are an option, but you will save more in the long term by showing you value your employees. Happy employees tend to stay with their jobs, allowing you to keep work flowing smoothly and avoiding the disruptions that happen when training a new employee. A business line of credit gives you the breathing room to hold on to your most valuable assets.
6. Refine your product
If it’s not broken, don’t fix it, right? That’s not always the case. If you formulated your products over a decade ago, there may be advances in technology or materials that can create a better product or a cheaper one to produce. You may also be able to offer new customizations, based off customer or employee feedback, or add new products to your line. This kind of research involves creating and testing prototypes, customer focus groups, and new marketing, all of which require capital.
You can also learn more about how to use lines of credit here, including about our Patriot Line of Credit, formulated specifically for veterans.
Are you ready to increase your working capital? Click here to download our ebook on the basics of of financing and learn about the options available to you, when you should start considering a business line of credit, and all other information you will need to start the process.
This communication is provided for informational purposes only. It is not intended to be an advertisement, a solicitation, or constitute professional advice, including legal, financial, or tax advice, nor is StreetShares providing advice on any particular situation.