Articles

Managing a warehouse is not an entirely easy task for small business owners. Trends come and go and it has probably happened that you have had a whole bunch of products in a certain color or size that you had to sell because they simply did not wear out. However, it is also common for companies not to keep track of their inventory due to the fact that the inventory does not really keep up. However, there are ways to remedy this and get the most out of your stock and thus your investment in your business.

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Create a routine for the inventory

A warehouse costs money for the company and is a great investment. Therefore, it is an extra pity if, due to the inventory, you do not get the most out of what you bought. Taking inventory means creating a register of the goods that are in your company's warehouse. The most common is to inventory once a year and if you have an inventory or inventory system, each item only needs to be inventoried once. If you have a smaller inventory, it's easier to keep track of the products and that's important to do because you can customize what you order in to what you already have. For example, if you notice that some items do not go as fast, you do not need to order as much of them next time.

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Stay on top of trends

An important part when it comes to inventory is to try to avoid tying up too much money in it because the risk of buying things that don't work out is that you have to sell them out later, or in the worst case not get them sold at all. By keeping track of your market's various trends, you can reduce that risk because you can control what you order in based on what is likely to sell the most.

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Ask customers what they want

Another tactic to not fill the warehouse with unnecessary products is to ask your customers what they want. You can do that in slightly different ways. If you have a physical store, you can ask customers at the checkout. It's an effective way to take the temp on demand. If you have an online shop, you can choose to ask the question at some point in the payment process on the website, or you can email the customer afterwards.

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Look back and learn from it

You can also learn from your own history. If you look backwards on orders and purchases, you can quickly see different patterns. For example, many products are seasonal, which means that they are eaten more or less in different seasons. Then you know if you have to cover up with a slightly larger stock of something for the winter and when you can reduce the order.

When you take out a loan, interest is the cost you pay the lender for them to lend you money and is usually the most decisive factor when it comes to choosing a lender. Below, we'll figure out what you as an entrepreneur should keep in mind to find the right thing in the interest rate jungle.

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Access to finance is a prerequisite for companies to be able to invest. And just as an entrepreneur should calculate the return on an investment, you should also keep an eye on what the exact total cost of an external financing solution will land on. In this way, you can make the most informed investment decision possible and thus give the company the right conditions to grow.

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When you as an entrepreneur take out a loan with Froda, the interest is the only cost of the loan. Unfortunately, it is far from the same for all players in the corporate loan industry. Unlike the consumer loan and credit market — where the total price of a loan is presented is clearly regulated — there is both a lack of regulation and a standard for how the price is presented when it comes to corporate credit. Therefore, it is important as an entrepreneur to have knowledge about interest rates, and how different ways of presenting it will affect the total cost of the loan, in order to be able to compare different offers and choose the most advantageous option.

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What is Interest Rate?

Interest is the cost that you pay a lender for them to lend you money. Usually the interest rate is expressed as a percentage of the loan amount, but in business loans it is also common for it to be stated as a fixed cost.

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Differences in different types of repayments

Depending on the type of amortization the loan has, the interest payments may differ on each given payment. In the case of an amortization-free loan, you pay current interest on the loan amount and the amount of each interest payment changes only if you choose to amortize the loan or if the interest rate changes (the latter only applies if the loan has a variable rate). In the case of business loans, however, the most common is that the loan either has straight amortization or that it is an annuity loan. In the case of straight amortization, you amortize a given amount at each amortization time, while the interest portion decreases as the debt decreases, and the expense of the loan also decreases over time. In the case of an annuity loan, you instead pay a given amount at each deposit during the life of the loan. In the beginning, therefore, the interest part represents a larger part of the expense of the loan, but decreases over time at the same time as the proportion of amortization increases.

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Nominal interest rate vs effective rate

The nominal interest rate indicates the interest rate at which the lender sets the loan and is what we usually refer to colloquially when we talk about interest and the interest rate stated in the contract. Instead, the effective interest rate shows what the actual cost of a loan is — as it also includes any additional fees associated with the loan and how often you pay off on the same — and is the figure to look for when comparing different offers. For consumer loans, the effective interest rate must always be stated and clearly exemplified in the marketing in accordance with the Consumer Credit Act. No such regulation exists when it comes to business loans, which is why it is often more difficult to compare different offers as it is difficult to know what the actual cost will land on. Since Froda does not charge any setup fees, invoice fees or other hidden fees, you as an entrepreneur can rest assured that the only thing that affects the effective interest rate from the nominal interest rate we present, is how often you choose to repay your loan.

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Annual rate vs monthly rate

Usually when presenting the nominal interest rate, one does it as an annual rate, that is, the percentage rate of the loan per year. This means that interest expense is based on calculating it from the underlying debt at the beginning of the year. Just as when it comes to the presentation of the effective interest rate, the annual interest rate is accepted when it comes to consumer loans, as it is also regulated in the Consumer Credit Act. However, since regulation is lacking when it comes to corporate loans, many players choose to present the interest rate as a monthly interest rate instead. However, many operators present the monthly rate incorrectly in that they divide the average monthly cost by the original loan amount, instead of dividing it by the average loan amount over the year. Something that makes the monthly rate appear to be half what it really is.

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Therefore, when taking a position on an offer with a monthly interest rate, it is important to consider whether the interest rate presented is really an accurate monthly rate, or whether it is the average monthly cost expressed as a percentage. An easy way to check this is to take the average interest cost for the first twelve months of the loan and divide that figure by the original loan amount. If the figure you get corresponds to the percentage presented as the monthly rate in the offer, it means that the actual interest rate is actually twice as high. If instead it is half that, the monthly rate presented is correct, and you can then recalculate the monthly rate to an annual rate by multiplying the interest rate of the monthly rate by twelve. This makes it easier to compare different offers and get a clearer picture of what the loan will actually cost you and your company.

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Interest on outstanding principal vs original loan amount

When talking about interest, it is accepted that interest is calculated on the outstanding capital and that interest payments decrease as the debt decreases. This applies regardless of whether the loan is amortization-free, has straight amortization or annuity. In business loans, however, operators may choose to talk about fee instead of interest linked to the loan, and that fee is constant throughout the life of the loan. However, using a fixed interest fee for each repayment means that the cost of the loan in relation to the total debt increases with each month, i.e. the percentage rate becomes higher over the life of the loan. That in itself is not a problem, but some actors choose to incorrectly present the initial interest expense, expressed as a percentage of the total loan amount, as the interest on the loan. And this is a problem because it makes the interest rate appear — similar to how some people misrepresent the monthly rate — as much lower than it really is. Therefore, if you receive an offer with a fixed fee, it is important to check that the interest cost relative to the original loan amount is not expressed as the percentage of interest on the loan and, on the other hand, to compile the total interest cost of the loan over its entire term, in order to be able to compare with offers that apply interest to the outstanding capital.

Black Friday has emerged as one of the biggest sales days in Sweden and globally. As a retailer, it is therefore important to be prepared to maximize opportunities. We've gathered some tips for both physical stores and e-retailers to maximize your sales.

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Strategies for physical stores

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Focus on upselling

Increase the average customer's purchase through upsell techniques, similar to those used by McDonald's. Customize your queries based on the customer's initial choices to optimize sales.

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Offer free products

Create campaigns where customers who reach certain purchase amounts receive specific items for free. This motivates customers to spend more to reach these levels.

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Focus on bestsellers or clear inventory

Customize your offers based on whether you want to attract new customers or reduce excess inventory. Strategic pricing of popular products or surplus goods can generate both sales and customer interest.

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Create in-store events

Arrange special in-store activities to create a unique shopping experience. Small snacks and interactions with customers can increase store traffic and sales.

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Strategies for e-commerce

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Free Shipping

Offering free shipping can increase conversion rates, especially for smaller purchases where shipping cost might otherwise be a deterrent.

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Exclusive offers to subscribers

Reward loyal customers and newsletter subscribers with special discount codes as thanks for their dedication.

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Optimize site performance

Ensure that your ecommerce platform is robust enough to handle high traffic volumes and that technical support is ready to handle any issues that arise.

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Strengthen customer service

Increase staffing or extend customer service hours during Black Friday to quickly address customer questions and concerns.

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By implementing these tips, you can improve both the customer experience and your sales during Black Friday. Good luck optimizing your marketing strategy for maximum impact!

Access to finance is a crucial factor in enabling businesses to drive growth, innovation and, in some cases, survive. For entrepreneurs, the world of financing options can appear both complex and overwhelming.

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Whether it's to start a new business, expand operations, or take on temporary financial challenges, it's important to understand the different options for financing that are available.

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Each form of financing has pros and cons, and what is best for your business depends on factors such as company size, industry, growth phase, and specific needs. It is also important to understand the financial implications of different forms of financing interest rates, repayment requirements, any collateral, and how these may affect the company's cash flow and finances in the long term.

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In this guide, you can read about the most common forms of financing that businesses can use, provide insight into how they work, and hopefully help you figure out which one is best for your company's unique needs and goals.

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Traditional bank loans

Traditional bank loans are one of the most established methods of corporate finance. Banks provide reassurance and often offer low interest rates and favorable terms, making them an advantageous choice for long-term investments such as business growth or larger purchases. However, the process of applying for a bank loan can be time-consuming and requires extensive documentation, including business plans and financial statements. They also tend not to lend to smaller companies as these do not generate sufficient returns for the bank and are considered too high risk, which is why bank loans are not an option for the absolute majority of all companies. However, for companies with a strong credit rating and a firmly established business model that can access a bank loan, it can be a cost-effective option for financing.

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Digital actors

Technological developments have meant that there are now a number of digital actors targeting funding to all those companies that banks do not lend to, such as Froda. These companies have built processes and credit models tailored to small businesses, allowing them to offer access to finance both faster and with less red tape than traditional banks. The digital players are often characterized by user-friendly interfaces, fast approval processes and payouts, making them an attractive option for companies in need of financing.

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Checkcredit

Check credit, also known as corporate credit or overdraft, is a flexible solution that allows businesses access to finance up to a predetermined limit. It is particularly useful for dealing with unforeseen expenses or short-term liquidity problems. Repayment is usually flexible and interest is calculated only on the amount used.

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Factoring

For companies with long payment times for customers, factoring can be an option to improve cash flow. Factoring is a financing method in which companies sell their outstanding invoices to a third party at a discounted price to instead get paid directly. Factoring enables companies to quickly convert invoices into cash, allowing for more efficient capital management and the ability to respond quickly to business opportunities.

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Leasing

For companies that want to avoid tying up too much capital, leasing can be an effective way to finance the company. Through leases, companies rent equipment for an agreed period instead of buying it in. In this way, companies can access the latest equipment without the large initial cost associated with purchase. In addition, leases can often be tailored to fit the specific needs and budget of the company, making it a flexible option for small to medium-sized businesses.

Hur påverkas Froda styrräntan?

Froda finansierar utlåningen till företag med hjälp av inlåning från allmänheten genom våra sparkonton. Inlåningsräntan som Froda erbjuder för sparkontona påverkas av rådande ränte- och marknadsläge. På grund av höjningen av styrräntan har vi därför behövt höja räntorna för våra sparkonton. Höjningen av inlåningsräntan har dock medfört att våra finansieringskostnader har ökat kraftigt senaste åren.

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Varför har ni höjt sparräntan?

För att kunna låna ut pengar till företag krävs det att vi har pengar tillgängliga att låna ut. För att vi ska kunna ha det krävs det att våra sparkonton har en konkurrenskraftig ränta jämfört med övriga marknaden för sparkonton i Sverige. Då höjningen av styrräntan har lett till att det allmänna ränteläget för sparkonton i Sverige har ökat senaste åren har vi behövt höja våra sparräntor för att fortsatt kunna ha pengar tillgängliga att låna ut till företag.

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Kommer det att påverka räntan på mitt företagslån?

I största möjliga mån kommer vi arbeta för att inte höja räntorna på redan utställda lån. På grund av de ökade inlåningskostnaderna kan vi dock komma att behöva justera räntan för ett fåtal kunder i enlighet med punkt 4 i de allmänna villkoren för låneavtalet. Vi gör i så fall detta för att säkerställa att vi ska kunna fortsätta att erbjuda samma service och tjänst som tidigare.

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Hur kommer det i så fall att påverka min återbetalning?

Vid en eventuell räntehöjning kommer varje lån att påverkas individuellt. Genom att logga in på Minas sidor kan du se din nya ränta och hur den påverkar din återbetalning. På Mina sidor kan du även se om du har möjlighet att ändra din återbetalningstid i det fall att du vill justera kostnaden för varje återbetalning.

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Kan ni komma att höja räntan flera gånger?

Huruvida vi kan komma att göra prisjusteringar flera gånger beror på styrräntans utveckling och det allmänna ränteläget.

Opportunity cost is a term often used in economics. But what does that really mean? And why is it good to keep track of it when running a business?

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As an entrepreneur, you are faced daily with various choices and priorities, big and small, and for every choice you make it means that something else stands back. It doesn't have to be that you actively choose one of several options, but your resources are not endless. Therefore, each resource used in a certain way leads to the fact that the same resource cannot be used in a different way. And this is where the opportunity cost comes in. The opportunity cost describes the lost revenue, or value, of the option that was removed.

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There is therefore much to be gained from learning about opportunity cost. Because if you take it into account in decision-making, it will allow you to make more informed decisions that benefit your company the most. When you invest time, money, or other resources in one part of your business, you indirectly opt out of other potential investments. Considering what is sacrificed allows you to make more informed decisions that maximize the use of resources and have the greatest impact for the company both in the long and short term.

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Using opportunity cost in decision making

Once you've figured out what opportunity cost means, you should take that into consideration when making decisions related to the company. Consider all options before making your decisions and settle into what you will give up in case you choose the respective options. By doing so, you can become better at analyzing the different options, estimating the value of your resources, and prioritizing what brings the highest return.

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When it comes to different investments, opportunity cost can come into play in different ways depending on whether it's an either-or decision or whether it's about how to allocate a resource. Let's say, for example, that you are going to buy a machine and choose between two options. Option 1 is cheaper, but option 2 has higher capacity and therefore can produce more. Simplified, then, the opportunity cost if you choose option 1 becomes the loss in production that option 2 had given, which would have subsequently led to you being able to sell more. If you had chosen option 2 instead, it would have meant that you would have had to spend more money initially and thus prioritize something else. The opportunity cost of option 2 would have been what you could have used the difference if you had chosen option 1 instead. Here, then, it becomes a trade-off to see which choice would have yielded the greatest return in terms of the overall picture.

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Opportunity cost thinking can also help you prioritize and value your time as an entrepreneur better. A clear example is the question of managing finances yourself or hiring someone. Hiring someone costs money, but doing it yourself means you need to put the time into it. You then need to sacrifice time that you could have spent on things that generate revenue. You can either save time or money and the trade-off becomes whether or not the income you had generated during the time you saved would exceed the cost of taking help. Another example is whether they should prioritize between different ventures and problems. You may have four different things you are able to accomplish in a given period of time. Three of them require less resource use while one requires more, and you need to choose between making the three smaller or the larger one. In this situation, it is easy to grasp the smaller tasks as they are likely to have a shorter starting distance and it feels good to get things done. But if all three smaller efforts together have less effect than the larger one, it is a waste of resources to prioritize them instead of the larger one.

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Opportunity cost and financing

Have you ever considered whether to save up for an investment or take one business loans and make the investment here and now? Or have you been thinking about whether to increase your purchases but are afraid of burdening liquidity too much? On both of these occasions, the opportunity cost had helped you make the most optimal decision. If you save up for an investment instead of using financing, you will certainly save on the cost of interest rate. But had you made the investment with the help of finance, you would have received a return for it sooner. If you save up for it, the opportunity cost becomes the lost return in the period until you make the investment. If the opportunity cost is higher than the interest cost of the business loan, your company would have benefited from the use of financing. The issue of financing larger purchases works in a similar way. Is the potential profit you can generate from making larger purchases, i.e. the opportunity cost in case you don't, higher than the cost of financing, making larger purchases using financing is optimal.

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The long-term effect

By leveraging opportunity cost, you can make more informed decisions that maximize your company's resources and generate the highest possible ROI. This will allow you to become better at identifying potentially profitable opportunities, navigating change, and not sticking to strategies that are not optimal. All in all, you'll be better at planning for the future, setting realistic goals, and developing strategies that leverage your company's strengths and capitalize on market opportunities. This will make you more successful in your business.