One of the key decisions that a business owner has to make is how to finance their business. There are many options available for financing wholesale and retail businesses, but not all of them are equally suitable for every business. Financing means providing an amount of money to a business in return for interest payments. Financing a business is giving equity to an owner or potential buyer of the company. Equity can be used as currency for future investments, for example, in case there are any future acquisitions or mergers.
What is Wholesale Business?
Wholesaling is the process of buying goods at a discount retailer and reselling them to other retailers or a company that then sells the goods to consumers. Wholesalers can be retailers themselves, or they may work for a company that has its own retailers. Many wholesalers are members of industry associations such as the American Wholesale Marketers Association and the National Association of Wholesaler-Distributors. Unlike retailers, whose sales are limited to their physical stores, wholesalers have access to a wider variety of products. Wholesalers may be able to offer lower prices on merchandise that would not be profitable for retailers because the retailer cannot pass the cost savings on to consumers. Some wholesalers specialize in a particular type of product or industry like wholesale kitchen cabinets, wholesale wood furniture, and even wholesale raw materials.
What is Retail Business?
Retail business is the process of selling products or services to customers. The term retailing means the process of buying and selling goods in small quantities to consumers, usually in a face-to-face environment. Traders of goods, especially in more industrialized parts of the world, are often called “retailers”. or “wholesalers” to distinguish them from manufacturers who typically sell directly to end users. Retail sales comprise a significant proportion of the overall economy in many countries, most notably the United States. In 2008, retail sales in the US totaled nearly US$2.3 trillion, employing 12.5 million people and accounting for 4% of total GDP. Projected retail sales in the US for 2009 are $2.496 trillion, meaning the US is set to surpass Japan’s total retail sales by more than $100 billion.
Financing Options for Wholesale & Retail Businesses
In order to grow and stay competitive in an ever-changing marketplace, wholesalers and retailers need to keep investing in their eCommerce infrastructure. This includes things like websites, warehouses, inventory management systems, POS systems, data analytics tools, and more.
Funding for Equipment
This is a type of funding that helps manufacturers and wholesalers to purchase equipment. It is also called capital expenditure or CAPEX. Funding for equipment can be used for both new and used equipment. The main benefit of this type of funding is that it reduces the risk for the manufacturer or wholesaler because they are not required to make monthly payments on the equipment and it is usually tax deductible.
The manufacturer or wholesaler can depreciate the equipment over a period of time. This is when they record the cost of the equipment in their books and deduct it from their taxable income (e.g., US Taxes) over a period of years. The more they are able to depreciate, the lower their taxable income has been, and thus, the less they pay in tax. In order to finance equipment purchases, the manufacturer or wholesaler may need a loan from a bank. However, in order to qualify for this type of financing, the company needs to have enough collateral that is worth the amount of money that they are asking for.
Funding for your Business
- Commercial mortgages are loans that are taken out by businesses to purchase property or land. Commercial mortgages can be used to buy a building or land, renovate a building, or build a new one.
- Asset finance is the funding of assets or capital expenditure that is not related to the day-to-day running of the business. It is usually used for large projects such as purchasing machinery and equipment, construction, and renovations.
- Cash flow support is when a company needs help with its cash flow in order to continue trading. This type of funding usually comes in the form of a monthly repayment plan over an agreed period of time.
Funding for your Stock
The stock industry is one of the most profitable industries today. Investing in the right stocks can make you rich. But, it can be difficult to find the right stocks to invest in for your portfolio. Fortunately, there are tools that will help you find the best stocks for your portfolio and even help you finance them.
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When it comes to funding for your business, there are many types of financing options that can help you. The most popular are loans and equity investments. Take Advantage of Loans. Loan options come in a variety of terms, including short-term loans and long-term loans. Short-term loans can be excellent to get your business out the door quickly, while long-term funding may be more appropriate for growth projects. Talk to a finance expert to get the right funding for your business needs.