Use Commercial Loans To Expand Your Warehouse Space
Posted on March 26, 2014 in Asset Based Finance
These days it seems like more and more companies are trying to find ways to reduce the amount of office space they have. Telecommuting has become popular because it allows a company to take on a new employee without the burden of paying for more commercial space. But there are some industries where commercial space is necessary and coveted. The warehousing industry, and any kind of company that has to maintain warehouse space, finds itself looking for ways to expand as retail sales around the world continue to climb. The days of brick and mortar stores are not over, but there are millions of people who enjoy the convenience of shopping at home. Drop-shipping has taken over the retail world and that makes more warehousing space necessary.
The business model for a warehousing company requires the company to be as close to its customers as possible. National distribution companies will maintain a network of warehouses all over the country that are as close to national shipping hubs as possible. The closer a warehouse is to a major shipping hub, the easier and less expensive it is to ship products to retail outlets and directly to clients. When a warehouse company finds itself in need of expanding its space, moving to a new facility is not always the best answer. The best answer, in most cases, is expanding warehouse space.
Expanding Warehouse Space Is A Good Business Decision
When a company decides to build a warehouse, the two primary considerations are location and cost of operations. That is why you will find most warehouses in rural or outlying areas instead of the middle of big cities. The newer warehouses are built where they are close to shipping hubs, but away from the traffic of the big city that can cause delivery delays. There is a great deal of planning that goes into determining where a new warehouse will be built. When it comes time to expand the warehouse space, the idea of moving to a new building is often very low on the list of considerations.
Expanding existing warehouse space is a good business decision and a sound economic idea. It is much easier to alter a space you are already familiar with than it is to try and become accustomed to something brand new. When you decide to move to a new warehouse, you also find out just how good you had it at your previous location. It is always a good business move to expand your current space than to sink money into trying to find something that will allow your company to expand smoothly. Building onto your existing warehouse does not disrupt your business and it opens up new doors of opportunity.
How Should You Finance Your Warehouse Space Expansion?
When it comes to business planning, there are several different kinds of plans that you can create to get a job done. A marketing plan can be finite, but it is also dynamic. It can be altered and changed as it goes along to make it more effective and appealing to the audience. A warehouse expansion project is very finite and relatively easy to plan. You know what you want to accomplish, and you know that the project will have a beginning and an end. Your primary task is to determine how to fund your finite project in a way that will not damage your company's financial position.
Commercial loans make excellent funding vehicles for warehouse expansion projects for several reasons. You can get building loans for your warehouse expansion that allow you to pay your contractors as you go along and track all of your spending. You can also get smaller commercial loans to pay sub-contractors, which makes it easier to monitor how much money is going to the primary contractor. When you have a commercial loan provider who understands how to administer funding properly, then you will be able to keep your project moving along smoothly and keep your spending under control at the same time.
Commercial Lenders Are Financial Partners
Another benefit to using commercial loans when expanding your warehouse space is that it allows you to establish a strong relationship with an important business partner. When you drive by commercial construction projects, it is common to see the name of the lender on the sign that announces the name of the project and the project owner. The reason commercial lenders get that kind of exposure is because they make the expansion projects possible with their financial assistance. When the expansion project is over, your company may need more funding for other projects. Establishing a good relationship with a commercial lender when you are doing a warehouse expansion project should be the first step in a long and successful relationship.
Commercial lenders also have contacts with the most prominent people in your local business community. One of the advantages to using commercial loans that most business professionals do not explore is the ability to use their commercial bank as a contact for business networking opportunities. A commercial lender is the kind of business professional who has his hands in most of the large projects going on the area. When you indicate that you need a better trucking company to accommodate your growing business, your commercial banker may have just the trucking company for you to talk to. Getting plugged into the local business community through your commercial banker is always helpful in growing your business.
Plan Your Warehouse Expansion With The Help Of A Commercial Lender
Your distribution business is growing and you know that you will need more warehouse space in the near future. The smart business owner is not going to wait until the situation reaches critical mass. Instead, he is going to pursue a solution as soon as possible to prevent the disruption of his business. Along with bringing in construction architects and engineers, a good business professional also brings in a commercial lender as well. The construction engineer will want to plan out your budget with you and you will need commitments from the commercial lender in order to make sure that you have what you need to move the project forward.
Commercial loans are excellent ways to fund your warehouse expansion. Not only is it easier to monitor spending when you are pulling the funding from a bank loan, it also reduces the strain on your cash flow during the construction process. After you have your plans drawn up for your expansion project, you need to start negotiating with your commercial banker to make sure you have the funding you need in place by the time you break ground. Expanding a warehouse is always much easier than building a new one, and funding that expansion with the help of commercial loans is always a good business decision.