Taking out a business loan from a money lender Singapore is a decision that requires careful consideration. You’re not just investing in your business—you’re staking your growth on your ability to outperform competitors. Before signing on the dotted line, it’s crucial to think about how your competition might affect your success. Let’s break this down into four key considerations to ensure you make a well-informed move.
Study the market and your competition
Understanding the market and your competitors should be the first step before you even think about a business loan. Get an idea of your potential market share and how the competition is performing so you can best decide how much you need to borrow.
For instance, if you’re planning to open a bubble tea shop, it’s important to know that Singaporeans are already spoiled for choice. If you’re in a highly saturated market, earning enough to pay back the loan might be more challenging. On the flip side, if you spot gaps in the market—like an underserved neighborhood or a niche flavor trend—you might be onto a winning idea worth financing.
Identify your advantages over the competition
Think about what makes you stand out from your competitors. This is your unique selling point (USP). Then, evaluate whether your USP is profitable or not. This will best tell you if a business loan will be worth it.
Think about the competition in terms of what they’re doing well and what they’re missing. You may have a similar product, but if you have much better customer service, you will still stand out over the competition. More so if your product has a unique innovation that others don’t have.
When you’re confident in your USP, a business loan becomes less of a risk. You can outrank your competitors, sell more of your product, and possibly gain a big14ger market share. This way, your income will be more than enough to pay off your business loan.
Know your competitors’ profit margins and pricing
In Singapore’s competitive market, pricing strategies can make or break your business. It pays to know the pricing strategies of your competitors, as well as how much profit they’re making.
For example, if you’re planning to sell artisanal coffee, understand how much your competitors charge for a cup and whether your pricing will allow you to remain competitive while covering your loan repayments.
One thing to avoid is going into a price war with the competition. This will usually put you in a race to the bottom. If you set your prices too low, you may not earn enough to cover loan repayment costs. That, or you will just earn enough to break even – in other words, your profits will be zero after loan repayments.
Anticipate possible responses from the competition
Don’t forget—your competitors aren’t just sitting still. When you enter the market, you effectively become their competitor. With that, they can do things like price markdowns, promotions, or special offers. These actions will drive more of the market to them instead of you, unless you also respond accordingly.
Think about how you can prepare for what your competitors may do. For example, if you’re opening a fitness studio, could you afford to counteract a competitor’s sudden discount campaign with your own limited-time offer? These campaigns will cost you, so it’s also important to consider if your income will still allow you to comfortably pay off your loan.
Conclusion
Taking out a business loan isn’t just about believing in your idea—it’s about knowing how well your idea can survive and thrive in Singapore’s competitive market. By understanding the landscape, defining your competitive advantage, studying pricing, and anticipating competitor reactions, you’ll be better prepared to make your business a success.
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