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Managing stock is not an easy task for small business owners. Trends come and go, and you've probably had a whole bunch of products in a certain color or size that you've had to clear out because they simply weren't being used. But it's also common for companies to lose track of their stock because their inventory can't quite keep up. However, there are ways to overcome this and get the most out of your stock and therefore your investment in your business.

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Create a procedure for the inventory

Inventory costs money for your business and is a major investment. So it's a shame if you don't get the most out of what you've bought because of the inventory. Taking stock means creating a record of the goods in your company's warehouse. The most common practice is to take stock once a year and if you have a warehouse or inventory system, each item only needs to be inventoried once. If you have a smaller stock, it is easier to keep track of the products and it is important to do so because you can adjust what you order to what you already have. For example, if you notice that certain items aren't being used as quickly, you won't need to order as much of them next time.

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Keep track 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 sell is that you have to sell them out later, or in the worst case, don't get them sold at all. By keeping an eye on the different trends in your market, you can reduce this risk as you can control what you order based on what is likely to sell the most.

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Ask customers what they want

Another tactic to avoid filling your warehouse with unnecessary products is to ask your customers what they want. You can do this in a few different ways. If you have a physical store, you can ask customers at the checkout. This is an effective way to gauge demand. If you have an online shop, you can choose to ask the question at some point in the checkout 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 back at orders and purchases, you can quickly see different patterns. For example, many products are seasonal, meaning they are used more or less during different seasons. You'll know if you need to stock up on something for winter and when you can reduce your order.

When you take out a loan, the interest rate is the cost you pay the lender for lending you money and is often the most decisive factor when it comes to choosing a lender. Below, we clarify what you as an entrepreneur should consider to navigate the interest rate jungle.

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Access to financing is a prerequisite for companies to be able to invest. And just as an entrepreneur should calculate what return an investment may bring, they should also be aware of the exact total cost of an external financing solution. This way, they 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 a business owner, take out a loan with Froda, the interest rate is the only cost for the loan. Unfortunately, this isn't the case with all actors in the business loan industry. Unlike the market for consumer loans and credits – where it is clearly regulated how the total price of a loan should be presented – there is a lack of both regulation and a standard for how the price is presented when it comes to business credits. Therefore, it is important for business owners to be aware of interest rates and how different ways of presenting them will affect the total cost of the loan, in order to compare different offers and choose the most advantageous option.

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What is interest?

Interest is the cost you pay a lender for lending you money. Usually, the interest 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 various types of amortizations

Depending on the type of amortization the loan has, the interest payments may differ with each payment. With an interest-only loan, you pay ongoing interest on the loan amount, and the sum of each interest payment only changes if you choose to amortize the loan or if the interest rate changes (the latter only applies if the loan has a variable interest rate). However, for business loans, the most common is that the loan either has straight-line amortization or is an annuity loan. With straight-line amortization, you amortize a given sum at each amortization opportunity, while the interest portion decreases as the debt decreases, whereby the expenses for the loan also decrease over time. With an annuity loan, you instead pay a given sum at each payment during the loan's term. In the beginning, the interest portion therefore constitutes a larger part of the expense for the loan but decreases over time as the amortization share increases.

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Nominal interest rate vs. effective interest rate

The nominal interest rate indicates the interest rate at which the lender issues the loan and is what we usually refer to in everyday speech when we talk about interest and the interest rate that is stated in the agreement. The effective interest rate, on the other hand, shows what the actual cost is for a loan – as it also includes any additional fees associated with the loan and how often you pay it off – and is the figure you should look at when comparing different offers. For consumer loans, the effective interest rate must always be clearly stated and exemplified in the marketing in accordance with the Consumer Credit Act. There is no such regulation 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 be. Since Froda does not charge any set-up fees, invoice fees, or other hidden fees, you as a business owner can be confident that the only thing that affects the effective interest rate from the nominal interest rate we present is how often you choose to amortize your loan.

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Annual interest rate vs. monthly interest rate

Usually, when presenting the nominal interest rate, it is done as an annual interest rate, that is, the percentage interest rate for the loan per year. This means that the interest cost is based on calculating it from the outstanding debt at the beginning of the year. Just as when it comes to presenting the effective interest rate, the annual interest rate is well-established when it comes to consumer loans, as this is also regulated in the Consumer Credit Act. However, as regulation is lacking when it comes to business loans, many actors instead choose to present the interest rate as a monthly interest rate. However, many actors present the monthly interest rate in an incorrect way by dividing the average monthly cost by the original loan amount, instead of dividing it by the average loan amount during the year. Something that makes the monthly interest rate appear half as large as it actually is.

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When considering an offer with a monthly interest rate, it is therefore important to calculate whether the interest rate presented is really a correct monthly interest rate, or whether it is the average monthly cost expressed as a percentage. A simple way to check this is to take the average interest cost for the loan's first twelve months and divide that figure by the original loan amount. If the figure you arrive at corresponds to the percentage presented as the monthly interest rate in the offer, it means that the actual interest rate is actually twice as high. If it is instead half as large, the presented monthly interest rate is correct, and you can then convert the monthly interest rate to an annual interest rate by multiplying the interest rate for the monthly interest rate by twelve. In this way, it becomes 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 capital vs. original loan amount

When discussing interest rates, it's generally understood that the interest is calculated on the outstanding capital, and the interest payments decrease as the debt decreases. This applies whether the loan is interest-only, has straight-line amortization, or is an annuity. However, in business loans, some lenders may choose to talk about a fee instead of interest linked to the loan, and that fee remains constant throughout the loan term. Using a fixed interest fee for each repayment means that the cost of the loan in relation to the total debt increases each month, i.e., the percentage interest rate becomes higher over the loan's term. This in itself is not a problem, but some lenders choose to incorrectly present the initial interest cost, expressed as a percentage of the total loan amount, as the loan's interest rate. This is problematic because it makes the interest rate – similar to how some incorrectly present the monthly interest rate – appear much lower than it actually is. If you receive an offer with a fixed fee, it's therefore important to verify that the interest cost relative to the original loan amount is not expressed as the percentage interest rate for the loan, and to compile the total interest cost for the loan over its entire term, in order to compare it with offers that apply interest to the outstanding capital.

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

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Strategies for physical stores

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Focus on upselling

Increase the customer's average purchase through upselling techniques, such as those used by McDonald's, where the customer is asked to add items that match the one they have already chosen. 

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Offer free products

Create promotions where customers who reach certain amounts get specific goods for free. This motivates customers to spend more to reach these levels.‍

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Focus on best sellers or clear stock

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

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Create in-store events

Organize special in-store activities to create a unique shopping experience. Small snacks and interactions with customers can increase footfall, which in turn increases the likelihood of higher 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 the cost of shipping can otherwise be a deterrent. Another way to get customers to spend more is to condition free shipping on spending over a certain amount.

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Exclusive offers for subscribers

Reward loyal customers and newsletter subscribers with special discount codes to thank them for their commitment or priority access to Black Friday offers. The latter is an easy way to create a sense of urgency among your customers, to get them to make their purchases earlier. Promoting that subscribers receive special offers is also an effective way to increase the number of people your email marketing reaches.

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Optimizing website performance

Make sure your e-commerce platform is robust enough to handle high volumes of visitors and that technical support is ready to deal with any issues that arise.

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Strengthen customer service

Increase staffing levels or extend customer service opening 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 for businesses to drive growth, innovation and, in some cases, survival. For entrepreneurs, the world of financing options can seem both complex and overwhelming.

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Whether it's to start a new business, expand your business, or take on temporary financial challenges, it's important to understand the different funding options available.

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Each form of financing has advantages and disadvantages, and what is best for your business will depend on factors such as your company's 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, possible collateral, and how these may affect your 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 insights into how they work, and hopefully help you decide 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 business financing. Banks provide security and often offer low interest rates and favorable terms, making them an advantageous choice for long-term investments such as business growth or major 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 businesses as these do not generate enough returns for the bank and are considered too high risk, so bank loans are not an option for the vast majority of businesses. 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 led to the emergence of a number of digital players focused on financing all the businesses 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 bureaucracy than traditional banks. Digital players are often characterized by user-friendly interfaces, fast approval processes and disbursements, making them an attractive option for businesses in need of financing.

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Overdraft facility

Overdrafts, also known as business credit or overdrafts, are a flexible solution that allows businesses to access 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 drawn down.

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Factoring

For businesses with long customer payment terms, factoring can be an option to improve cash flow. Factoring is a financing method where companies sell their outstanding invoices to a third party at a discounted price to get paid directly. Factoring allows companies to quickly convert invoices into cash, enabling more efficient capital management and the ability to react quickly to business opportunities.

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Leasing

For businesses that want to avoid tying up too much capital, leasing can be an effective way of financing the company. Through leasing agreements, businesses rent equipment for an agreed period instead of buying it. This way, businesses can have access to the latest equipment without the large upfront cost associated with buying. In addition, leases can often be tailored to suit a company's specific needs and budget, making it a flexible option for small to medium-sized businesses.

How does Froda affect the key interest rate?

Froda finances its lending to companies with deposits from the public through our savings accounts. The deposit rate that Froda offers for the savings accounts is affected by the current interest rate and market situation. Due to the increase in the key interest rate, we have therefore had to increase the interest rates for our savings accounts. However, the increase in the deposit rate has led to a sharp increase in our funding costs in recent years.

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Why have you raised the savings rate?

Lending money to businesses requires that we have money available to lend. To be able to do this, our savings accounts must have a competitive interest rate compared with the rest of the market for savings accounts in Sweden. As the increase in the key interest rate has led to an increase in the general level of interest rates for savings accounts in Sweden in recent years, we have needed to raise our savings rates in order to continue to have money available to lend to companies.

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Will it affect the interest rate on my business loan?

As far as possible, we will endeavor not to increase the interest rates on loans already issued. However, due to the increased cost of deposits, we may need to adjust the interest rate for a small number of customers in accordance with paragraph 4 of the general terms and conditions of the loan agreement. We will do this to ensure that we can continue to offer the same service as before.

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If so, how will this affect my refund?

In the event of an interest rate increase, each loan will be affected individually. By logging in to My Pages, you can see your new interest rate and how it will affect your repayment. On My Pages, you can also see if you have the option to change your repayment period in case you want to adjust the cost of each repayment.

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Could you raise interest rates several times?

Whether or not we might make multiple price adjustments depends on the development of the policy rate and the general interest rate environment.

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

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As an entrepreneur, you are faced with various choices and priorities on a daily basis, big and small, and for every choice you make, something else has to take a back seat. It doesn't have to be that you actively choose one of several options, but your resources are not infinite. Therefore, every resource used in a certain way means that the same resource cannot be used in another way. And this is where opportunity cost comes in. This is because opportunity cost describes the lost revenue, or value, of the alternative that was chosen.

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There is therefore much to gain from learning about opportunity cost. Because taking it into account in decision-making will lead you to make more informed decisions that benefit your business 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 being sacrificed will allow 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 understand what opportunity cost means, you should take it into account when making decisions about your business. Consider all the options before making your decisions and understand what you will give up if you choose each option. By doing so, you can better analyze the different options, estimate the value of your resources and prioritize the one with 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 is a question of an either-or decision or whether it is about how to allocate a resource. Let's say, for example, you are going to buy a machine and you are choosing between two options. Option 1 is cheaper, but option 2 has a higher capacity and can therefore produce more. In simple terms, the opportunity cost if you choose option 1 is the loss in production that option 2 would have given, which would then have led to you being able to sell more. If you had chosen option 2 instead, it would have meant that you had to spend more money initially and thus prioritize something else. The opportunity cost of option 2 would then have been what you could have used the difference for if you had chosen option 1 instead. So here it becomes a trade-off to see which choice would have given the greatest return seen as a whole.

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Opportunity cost thinking can also help you prioritize and value your time better as an entrepreneur. 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 spend time on 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 is whether or not the revenue you would have generated in the time you saved would exceed the cost of getting help. A further example is whether to 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 doing either the three smaller ones or the larger one. In this situation, it is easy to tackle the smaller tasks as they are likely to have a shorter start-up time and it feels good to get things done. But if all three smaller efforts together have less effect than one 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 you should save up for an investment or take out a business loan and make the investment here and now? Or have you thought about whether to increase your purchases but are afraid of putting too much strain on your cash flow? In both cases, the opportunity cost would help you make the most optimal decision. If you save up for an investment instead of using finance, you certainly save on the cost of interest. But if you had made the investment using finance, you would have received a return on it sooner. If you save up for it, the opportunity cost will therefore be the forgone return until you make the investment. If the opportunity cost is higher than the interest cost of the business loan, your business would have benefited from using finance. The question of financing major purchases works in a similar way. If the potential profit you can generate from making larger purchases, i.e. the opportunity cost of not doing so, is higher than the cost of the financing, then making larger purchases using financing is optimal.

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The long-term effect

Using opportunity cost allows you to make more informed decisions that maximize your company's resources and generate the highest possible returns. As a result, you'll be better able to identify potentially profitable opportunities, navigate change, and not cling to sub-optimal strategies. Overall, you will become 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 lead to you being more successful in your business.