3 situations when you should use loans to boost your startup
Founding your startup can be risky. Taking loans which you cannot repay is even more risky. However, since cash is not always at hand and raising funds takes time, loans are a good idea in certain situations. Here are three investments in your startup you should consider getting a loan for.
1. Customer Acquisition
Customers and clients are the very core of every business. It takes time to channel them in, and understand what works best to attract them. When you know that every dollar you invest in a funnel gets you a certain return, then loans are great in this situation to boost your customer acquisition.
2. Recruiting Key Players
While often founders are great at the work they do, as the startup scales, they often need experienced and talented players to keep the momentum going and accelerate growth in other avenues. While it is essential to know who you are recruiting and whether the person is going to stay, investing in them and keeping them happy is an important aspect of your business. Plus, you know that their work will get you returns.
3. Acquisitions for expansion
We often do not hear about small startup acquisitions, even know they are far more common. When you’re looking to partner up, or acquire a smaller startup that will boost your growth and sales, then it is an investment worth taking out a loan for.
Essentially, it boils down to the fact that there are certain situations, which albeit risky, have immense potential to provide returns. Calculate the risks, make an informed decision of the potential return, and you’ll know whether taking a loan will be worth it.