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Originally Posted On: https://zinchfin.com/how-capital-can-drive-sales/
Healthy working capital can help small business owners streamline operations, reduce expenses, and improve their bottom line. Therefore, capital is one of the most important factors in your business, as it allows you to grow and expand.
In this article, we not only look at the benefits of working capital but also discover how it can help in increasing sales. Plus, we reveal how you can quickly and easily obtain a working capital loan to help you drive sales in your business and fund your growth.
The Benefits of Working Capital
Working capital describes the amount of cash that a company has on hand. It’s the difference between the amount of money you have in your bank account versus what needs to be paid out each month. Your business’ working capital also includes inventory, accounts receivable, and other assets that can be converted into cash.
A healthy working capital means your business has enough cash to keep running smoothly and effectively, while also having room to grow. When you have plenty of working capital, it allows you to pay for things like inventory, marketing campaigns, and equipment upgrades.
If your working capital is low, however, then it can affect your ability to attract new customers and make sales. A company with limited capital will also have a hard time competing against larger companies that have more resources available for offering similar products or services at a cheaper price point.
How You Can Use Capital to Increase Your Sales
There are many ways that working capital can be used to drive sales within your business:
1. Capital Can Help Expand Inventory
Capital is a vital element in helping business owners expand their inventory. It can be used to purchase more inventory, as well as to purchase higher-priced and higher-margin items to help you keep ahead of your competition.
Capital also has the power to increase profitability by allowing businesses to pay for inventory at once rather than on a weekly or monthly basis. This lets companies avoid paying interest on their accounts receivable (money owed), which means they’re making more per item sold than they would otherwise be able to do so with cash flow alone.
Ultimately, when you have more inventory, it gives you the ability to sell more products and services. You can also use inventory as collateral when obtaining additional capital.
2. Capital Can Ramp Up Marketing Efforts
Marketing can be one of the most effective ways to grow your business, but it’s not easy to do on a shoestring budget.
You can use capital to fund a campaign that will be effective in the long run but is too expensive to start off with. For example, if you want to reach new customers on social media or set up an email list for your business, those things require money upfront. However, once you build up a list of subscribers and followers, it can help keep costs down when you’re ready to promote your products or services.
When it comes to expanding your marketing efforts and subsequently increasing your sales, capital can also help with:
- Paying for the creation of blog posts and infographics
- Creating more content for social media
- Expanding your reach with influencers
- Creating a new website or redesigning an existing one
- Running digital advertising campaigns
3. Capital Can Pay for Upgraded Business Equipment
Outdated or faulty equipment can have a detrimental effect on your small business and restrict your sales. Having sufficient capital on hand can help you upgrade your equipment to increase your productivity and offer a better customer experience, thus leading to more sales.
For example, if you run a restaurant, upgrading your kitchen equipment can streamline the cooking process, resulting in lower wait times for diners, greater customer satisfaction, and more customers.
4. Capital Can Help You Renovate Your Small Business to Attract More Customers
A renovation can also help you attract more customers, and therefore, boost your revenue. If your business has a dated look or doesn’t have enough space for inventory, it’s going to be hard to attract new clients or expand your operations.
Renovations can make your business stand out from the competition. Plus, creating an atmosphere where people want to come back again and again can increase customer loyalty and help with repeat purchases and referrals from satisfied customers.
Need a Working Capital Loan?
Capital is important for growing and scaling a business, but it’s also crucial for keeping your company afloat in the early stages. Many businesses start out with very little capital, which means they have to be resourceful when it comes to funding their operations.
This is where a working capital loan from Zinch comes in handy, as it provides you with the capital infusion you need – and fast. Contact us at (714) 500-6622 to learn more about your options. You could qualify for up to $250,000 in just 24 hours.