The Retailer’s Guide to Financing

Apr 29, 2023

Business professional analyzing finance graphs on a laptop, signifying strategic financial planning for retailers.

How to know when you’re ready and how to prep

How to Determine When it’s Time for Financing

You’ve come up with a solid business plan and you’re seeing an increased interest in what you have to offer. But ramping up your business to keep up with demand is easier said than done. Growing sustainably means that brands often need to find financing solutions that can help them scale. 

But how do you know when it is time to apply for financing? There are a few scenarios that many emerging businesses face that are indicative of when the time is right. In this retailer’s guide to financing, we’ll walk you through the signs as to when to get funding, so you can start future-proofing your business now.

Going Wholesale

Your direct-to-consumer brand relies heavily on marketing to get the word out about your products, which worked well so far. You’re ready to take it one step further, and possibly even some retailers are taking notice of your brand. Going omnichannel is a great way to get more of your products into the hands of consumers. What’s more, the wholesale business model benefits both the brand and the wholesaler by creating efficiencies. On the other hand, it also requires vigorous inventory planning, and going wholesale takes up a big chunk of a business’ budget. Juggling marketing spend while paying suppliers and hiring a third-party-logistics company (3PL) that can handle omnichannel fulfillment, can often be a burdensome headache that adds to the stress of growing a business. As you’ll need to reallocate more of your budget to inventory purchases and warehousing to supply the wholesaler, more of your money will be taken away from other areas. And that is where financing comes in.

You don’t want to run out of money by locking up your own dollars in purchase orders, but keep that cash on hand for more important business areas and unexpected situations. If you’re an emerging brand that’s ready to take on the wholesale world, but don’t have the extra cash to do so, then it is likely time for financing!

As an example, purchase order financing can help stressed business owners figure out how to pay suppliers the purchase order costs they need to, while keeping cash on hand which can be used to develop new products and increase marketing spend. You can find out more about Purchase Order Financing here.

Lastly, when looking for a financing partner, surround yourself with skilled and experienced advisors and lenders who have worked in the category or product type you are offering. You can also ask other companies that have worked with your wholesaler about their experiences, both their successes and their follies with financing.

Accelerated Growth

Orders are pouring in, and your brand is seeing accelerated growth. When a lot of growth happens quickly, it is all about being able to scale sustainably. Future-proofing your business often takes thorough planning, and also some dollars to fuel that growth. Again, the worst use of your valuable cash is to spend it on manufacturing your products, because it ties up capital that is better used on equipment, marketing, and people (among other things.) If you find yourself in a situation where demand is growing quickly, but you’re lacking the funds to keep up, then it is likely time for financing!

Businesses often need extra capital to purchase more inventory and finance their growth sustainably. A line of credit from an experienced lender can free up a lot of your own cash for more important areas, while growing your inventory positions and scaling the business month-over-month. Fast growth indicates that it is time for financing, and also to cast your net and hire finance personnel to help with your business’ finances, and to handle the process of obtaining extra capital.

Long Lead Times When Buying Overseas

After a few years of economic uncertainty, it is safe to say: uncertainty is the future. Lockdowns, supply chain issues and other factors have led to many deep disruptions, and brands had to find new ways to keep up with demand. In order to adapt quickly to sudden changes in demand, it is advised to stock up and purchase more inventory ahead of time to stay ready and prepared, to not lose out on sales. After all, 46% of consumers are switching to the competition when their favorite brands run out of stock. 

The timeline from beginning production to landing goods in the warehouse, then delivering to customers or wholesale partners can take many months. To reduce uncertainty, make sure to keep more inventory on hand, diversify product sources, increase the number of suppliers, and shorten supply chains. 

If you find yourself running out of products often and needing to stock up, but don’t have enough cash on hand to do so while staying focused on other areas, it is likely time for financing! After all, your reputation and customer satisfaction are on the line. As brands grapple with the challenges of 2023, they’ll need to stay flexible. Especially with a looming recession on the horizon, being agile is more important than ever. Partnering with an experienced lender allows businesses to keep the cash on hand needed to adapt to sudden changes, smooth out bumpy periods, and more.

How Can My Business Prepare?


The way businesses handle accounting and financial documents is important, and a first step to securing a financing deal. In order for lenders to grant loans or lines of credit, they are often looking for documents with accrual accounting, rather than cash basis accounting. Although cash basis accounting is easier to maintain and understand, accrual basis accounting gives a fuller and more long-term perspective on how the company is faring, which makes you more likely to obtain the capital that you are looking for. 

Know Your Performance Inside and Out

Another important way to prepare is to get a good understanding of the problem you are solving. Know your sales performance and margins inside and out, and be able to communicate how you are going to use the funds. Update your books at least monthly, and be able to speak on how you are managing expenses like salaries and marketing. Show in your cash flow projections how you are planning to use the money to find out how much you really need. This will go a long way with investors and lenders, and brings you a step closer to receiving the funds your business needs.

Understand Your Options

There are many different financing options out there, and it is important to gain a good understanding of what they are, including pros and cons. Not every financing option makes for a good solution, and heavily depends on the nature and setup of your business. Businesses just starting out can benefit from unsecured options like merchant cash advances (MCAs) from businesses like Shopify. Merchant cash advances are an easy and quick way to get business funding: the lender gives you a lump sum of money that you repay through sales, and you don’t need any collateral to secure the loan.

On the other hand, there are also more mature capital solutions. Secured loans, or asset-based loans, are backed by collateral such as inventory and receivables. Rather than taking a percentage of sales or even ownership in exchange for a loan, lenders secure their investment by lending against assets that you already have in your warehouse. As an example, a working capital loan and funding from Assembled Brands provides emerging businesses with the necessary capital to pay for day-to-day overhead and operating expenses. 

Get informed, understand your options, and carefully decide which funding solution makes the most sense for your business.

The Bottom Line

Determining when it is time for financing varies from business to business. Generally, in stages of heightened growth or expansion, it is likely time to look into financing to support that growth. Use your business’ cash for the most important areas of your venture. Avoid locking up your own cash in inventory or purchase orders to stay flexible – especially in times of economic uncertainty.

Also, leverage the assets you already have. If you’re a direct-to-consumer brand, your current inventory and receivables can be used to finance your growth without having to give up ownership or equity. A line of credit allows for flexibility and comes in handy when you are expecting to make a big purchase in the future, but don’t know yet how much it’ll cost.

If your brand is ready to take the next steps in their growth journey and apply for financing, our partners at Assembled Brands are ready to help. The lender has extensive experience with revolving lines of credit, and has helped countless top consumer brands finance their growth over the last decade.