Electronics stores, including cell phone stores, kitchen appliance stores, and electronic repair stores have experienced hardships over the past five years, as they often have to compete with mass merchandisers, including department stores like Walmart and Best Buy, and online sellers multiplying with the rise of the e-commerce market. Let’s not forget the strain faced by all small business owners amidst the Coronavirus (COVID-19) outbreak this year. It’s clear that operating an electronics store requires a lot of capital; so, if you are a small electronic business owner or aspire to be one, you will most certainly benefit from a business loan.
Business loans can help you tackle a myriad of expenses that you will certainly face while starting up or operating your electronic store. Let’s take a look at those expenses.
Commercial rent isn’t the same as renting a one-bedroom apartment. Depending on the city you operate in, rent can cost you a few thousand dollars a month. Before opening, make sure you have ample capital to cover the cost of rent for at least a few months, ideally for two years.
Check out the pros and cons of having a home-based business vs. a brick and mortar business.
Displaying your products, whether they are computers, cellphones, or televisions, will require some store fixtures like shelves, desks, glass coverings, etc. Décor for your shop will also result in some expenses. You’ll want to account for lighting, wall décor, paint jobs, seating for customers, flooring, and any other aesthetic features that might cost money. To save on fixtures and décor, you might want to consider looking for used goods online, as well as auctions and garage sales. Keep an eye out for closing businesses as well – they tend to sell their fixtures before they close for business.
You’ll want to be fully stocked on enough products for at least four months to ensure you always have something to sell to your customers. Do your research and figure out who your suppliers are well in advance of opening, and make sure to account for surprise expenses and delays that may come with lost shipments, broken products, or mistake orders.
Learn how to manage your small business inventory.
To save on advertising, you might consider word-of-mouth and organic social media tactics to promote your business. However, if you want to invest in wider advertising, you’ll need to account for high costs for ad agencies and signage, which can cost you anywhere from $1,000 – $10,000 (agencies) and $500 to $1,000 for signage.
If you own the building you operate in, you’ll need to purchase property insurance. Even as a tenant, you may want to consider tenant insurance, which could cover the cost of lost inventory, for example. Furthermore, you’ll need to cover insurance for your employees if you hire labour.
If you’re opening a used electronic store, you may want to consult with a lawyer to learn how to handle the legal landscape for a few different scenarios, including possession of stolen goods. Accountants can also help you manage your expenditures and ensure your taxes are in order; however, there is a growing amount of business owners who are beginning to teach themselves how to manage their taxes in order to save on the cost of an accountant.
If your shop is small enough, you might consider working the days yourself to save on labour costs. To hire reliable staff, you’ll often need to invest in more than the minimum wage for labour. Make sure to account for these costs before starting your business.
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To obtain a business loan, you’ll often need to check a few boxes for your lender. However, those boxes will depend on the type of lender you go with. Let’s take a look at your options for choosing a lender for your business loan.
If you have capital, good credit, and proof of income from your business for an extended period of time, you might be fortunate enough to be able to secure a business loan from a bank. With lower interest rates, business loans from banks are an ideal option for small businesses. However, the requirements are often strict. If you have bad credit, for example, it will be much more difficult, almost impossible, to secure a loan from a bank.
Credit unions offer more personalized services to their clients, being smaller in size. Some people prefer this to the often large-corporation feel that banks have. Credit unions also offer reasonable rates that are quite comparable to banks, if not only slightly higher. They often tend to be a bit more lenient in their requirements for a loan than a bank. However, the process for obtaining a business loan from a credit union can be lengthy. They might need more time to establish trust and often want to have you as a client for an extended period of time before offering a loan to someone with a less-than-ideal credit score.
If you are having trouble securing a loan from a bank or credit union, you can opt for an alternative lender. Often more lenient than both banks and credit unions in loan requirements, alternative lenders will almost always have higher interest rates on the money they lend.
| Amount | APR | Term (months) | ||
 | 1k-300k | Fee-Based: Starting at 9% | 12- 60 | Learn more |
 | 5k-300k | 8% – 29% | 6-18 | Learn more |
 | 1k-500k | +5.9% | 3-60 | Learn more |
 | Up to 300k | 8%-22% | 6-12 | Learn more |
 | 5k-500k | - | 6-18 | Learn more |
 | 100K + | 6.05% + | 60 | Learn more |
 | 5K-100k | 15%+ | 12-18 | Learn more |
Before applying for a business loan for your electronic store, you will need to produce a variety of documents.
Your credit score is a summary of your credit history that can either solidify or diminish your chance at securing a loan. Your business also has its own credit score; however, if the business is new, lenders will look at your personal credit score in determining whether or not to lend to you.
Your business plan includes details about your future business and is a document that most lenders will want to see before lending to you. Your business plan should cover a general summary of your business, market and product research, marketing and sales plan, as well as financial details, including funding and pricing for products.
Check out how to create success with a 5-year business plan.
If a more traditional business loan is not the right choice for you and your business, there are other business financing options you choose from.
A merchant cash advance allows a borrower to borrow money as an advance on future sales. Typically, you can borrow a percentage of your annual revenue and pay it back with a percentage of your sales each day. Credit card sales are ideal in this sort of arrangement, as the lender is able to deduct repayments based on those records.
Lines of credit are a great option for small businesses, especially for long-term projects. Similar to credit cards, lines of credit tend to have a higher amount limit, as well as lower interest rates.
Opening up an electronic store is not an easy task. With expensive inventory – televisions, computers, and appliances, as well as all of the other expenses associated with opening up a business, owning an electronic store is not an easy task. However, with the right financing options and careful planning, there are many ways to ensure your shop is successful. If you’re looking for financing to help grow your business, Loans Canada can help!
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