Business Loan: Making It Work For Your Company

Capital (cash, money, dough, moolah) is an asset and like all business assets, it should be used in the most efficient manner – a manner in which it brings solid value to the business (return).

But, capital is a hard asset to acquire these days and thus, should your company be in a position to receive outside financing like a business loan – then that capital should be properly put to use as your business might not have this opportunity again in the near future.

In private equity deals (venture capital, angel capital), most investors will traunch their funds. This means that they will dole out their investment in chunks based on the investee (the growing company) meeting certain milestones in either customer acquisition or revenue generation.

This is done to essentially set up an option for the investor – where the VC or Angel can re-evaluate the deal at certain stages to determine if they want to continue to pour in money or to simply cut their losses.

Now, an option is only valuable when it is in play – take it out of play (like fund the entire amount up front) and the option becomes sunk (worthless).

While this seems to protect the investor, it can also work for a business seeking a business loan.

A business can fundamentally create their own traunch of funds – creating an option for themselves – an option that provides value, such as:

1) Getting Approved:

Allowing the business to request less initially making that request more likely to be funded. While your company may budget that it needs $100,000 in a business loan over the next three years – it does not need all those funds right now. Cut that request up into traunches and get those funds as needed.

This will also show your lender that you can properly manage their business loan and your operations and thus make future requests more palatable.

2) Cut Your Losses:

Measure the results of each traunch. If things are working out as planned, then request the next traunch. If not, scrap the plan and try something else. At least in this case, you will only be on the hook for a smaller amount then the total $100,000 that was planned.

3) Flexibility:

By traunching your funding, you offer your business much more flexibility. What happens if your business meets its goals with only half the investment (loan) or only after one traunch. If that is all you have had to borrow, you have saved your company large fees and tons of interest over the life of the loan.

Typically, when businesses receive funding they really don’t need or can’t use right away, they tend to manufacture ways in which to spend those funds – ways that might not be in the best interest of the company’s long-term future (kind of like having that money burning a hole in your pocket).

Most business owners panic when they think they need outside money and the common assumption is to get as much as you can at a single time. But, this takes the option value out of the equation and could potentially create more future harm for your business.

You would not go out and purchase 20 brand new computers for just 2 new employees thinking that you will hire an additional 18 employees over the next three years. That would just be inefficient and wasteful.

Thus, why raise more money then your business needs right now.

The goal here is to ensure all your business assets are working overtime to bring in value and profits for your company. If you have too much of a single set of assets, then those assets are not being put to their best use (which is very un-business like).

Make your business loan work for you by treating it as the asset it really is.

10 Methods for Promoting Your Tutoring Business

1. Direct Mail

Direct Mail includes flyers or postcards that are mailed directly to homes in your target market. There are many companies that will design, print and mail postcards for you which can reduce your costs significantly. Companies that offer mailing services typically also offer mailing lists that can help you target your mailing. It’s a good idea to target higher income areas since a higher percentage of these households have income that can be spent on tutoring services which will result in a higher return on your advertising investment.

2. Google AdWords

If you already have a website for your tutoring business, Google AdWords is an affordable way to market your promote your business and drive traffic to your website. A great thing about Google AdWords is that it allows you to target your ads to specific cities or regions where your clients might come from. You can also select keywords that people typically enter into search engines when searching for tutoring services. This helps you maximize the impact of your advertising dollars by displaying your ads only to users who might be interested in your tutoring services.

3. School Guidance Offices

School guidance counselors can be an excellent source of students seeking tutoring since they are often aware of students that need extra help with their studies. It’s a good idea to introduce yourself and the tutoring services you offer to the guidance counselors in each school in your market. Leaving brochures and some business cards is helpful since it makes it easier for your information to get passed on to parents.

4. Community Centers

Advertising on bulletin boards in community centers can be effective since a lot of young families with children spend time here for sports and other activities. Some community centers have racks that you can fill with brochures or flyers or they might have a bulletin board where you can place a flyer or tear sheet.

5. Online Tutoring Directories

More and more people are going online to find tutors and tutoring services. When people search for tutoring services online a popular place to look is on tutoring directories, which organize tutors by location. This makes it easy for students or parents to quickly find tutoring services available in their area. Listing your business in the main tutoring directories for your region or country will help more people find your business.

6. Email Marketing

Email marketing can be used for both potential and former clients. If you have a website you can collect email addresses on your site. You can also save email addresses from current and formers students. You can then use your email list to notify potential or former students of promotions, events and other updates about your business. It’s important that your email marketing complies with CAN-SPAM regulations. Email marketing programs like MailChimp or Constant Contact can help you run your email campaigns.

7. Word-of-mouth

One of the lowest cost methods of promoting your business is word-of-mouth. Students and families are always looking for tutoring services that get results and they are more likely to trust recommendations from friends. To increase word of mouth you need to provide high-quality tutoring and create satisfied clients. You can also encourage word-of-mouth by rewarding existing clients with referral bonuses and providing them with extra copies of your business card to hand out to anyone they know who might need tutoring. If you know a client is satisfied with your tutoring services just ask for some referrals – they’ll be happy to help if they can.

8. Facebook

Facebook offers a couple methods for promoting your tutoring business. First, you can use Facebook’s advertising platform which lets you run highly targeted ads for your location and your target age groups. Another method for promoting your business on Facebook is to create a free business page. You can provide information about your business, post updates, promotions and more. By encouraging people to “Like” your page on Facebook, friends of that person will see your business page on that person’s profile.

9. Telephone Directories

Although printed telephone directories are slowly being replaced by online versions, there are still a lot of people who rely on the phone book for information about local businesses. If you have an established tutoring business, placing an ad in your local telephone directory can pay off. You can also list your business in online telephone directories.

10. Website

Having a website for your tutoring business is becoming a necessity as more people rely on the internet to find information. There are many free options available that allow you to create and host a simple website without any programming knowledge. More established businesses might choose a more advanced option such as a professionally designed template or even a custom-designed site. Having a website allows people to find all the information they need to know about your business when they search for tutoring services using search engines like Google or Yahoo. A website also allows you to take advantage of marketing tools like Google AdWords, provides you with a method to collect contact information and email addresses from potential customers and it makes your business appear more professional.