Running a Business Is More Than Just Sales
I know you are probably sick and tired of hearing about the CoronaVirus, but if it did teach us one thing is that we were not prepared for what happened both personally and in business. Many people are finding themselves in financial predicaments trying to make ends meet, they are at risk of being homeless, losing their cars, and hitting the food banks to feed their family. While thousands of small businesses have closed their doors for good, and the owners now are looking to find a way to take care of their family and their future.
Of course, it is easy to have 20/20 hindsight or be a Monday morning quarterback, but the simple truth is that the best time to do something is now. What do I mean by doing something? Well, no matter if you need to protect yourself personally or protect your business, or both it’s time to get yourself in a situation to handle the next situation. There will be another situation! It’s just a matter of when. No, it doesn’t mean it has to be a virus, it could be an economic collapse, which could affect you too. There are other life-altering events but I am not going to get into them. Just realize that it’s going to happen. And if you were one who somehow benefitted and did better during the crisis, it doesn’t mean that the future will be as rosy and bright.
I am not saying that you must live in fear. What I am saying is to be smarter than the average Joe. Preparing yourself means having access to cash and creating a nest egg. We all know that it takes access to cash to build that nest egg. To do this, two main areas have to be addressed first to come to a starting point.
It’s time to take a long hard look at the factors that will give you access to cash. First, we look at the personal side of this which means we must start with personal credit. No matter how bad your credit is it is never bad enough that it can’t be fixed. I have had clients that we’ve had to reset their credit three or more times because they just can’t control themselves. So no matter where you are in your credit profile is the starting point.
It does take control but the effort is worth it. Hiring a professional to repair your credit doesn’t mean you can sit back and wait. You need to be involved and responsive! Depending on the state of your credit will also determine the length of time that the process will take, it may require starting from the beginning. This means that the credit report is cleaned up and the process of establishing new credit begins.
To maximize approvals of high credit limits and lines of credit, the credit report needs to be created with depth, meaning that age, usage, and variety account for the major guidelines that result in higher approval limits. When starting from scratch, it takes time to utilize the new credit acceptably and to add the required age needed to the accounts, but as we all know time flies. Think of it this way, where were you three years ago? Is your situation the same? If you started 3 years ago you would easily have access to 100k in cash, saved hundreds in interest, saved on insurance payments and so many other benefits. I will also guarantee you your life would be so much better off and most of all you would be more relaxed which will result in you living a longer and more active life.
If you are a business owner, now is the time to start getting your business entity in shape and prepared not only to handle economic changes but to enhance growth. Growing a successful business doesn’t only mean concentrating on making sales. It’s not only about how much money is coming through the door it’s about how that money is handled once it does come in. It also takes building the business’s credit profile and viability, which will provide the business with easy access to cash and inspire growth.
Taking care of the back of the house is one of the singular most important aspects of running a business. Yes, you must produce the sales, but how you record those sales, maintain the product, evaluate profits, maintain financial and your banking is crucial. Along with this, you must understand that the business is its own entity and it should run that way. That means that using personal funds or commingling personal credit to fund the business, is just not a great business sense. Business needs access to more funds than you can handle personally, and this can also leave you personally inept in your finances.
Business credit is viewed by all lenders, banks, vendors, and even the government. Many small businesses that apply at their local bank get turned down for business finance because they lack business credit. Think of it this way, many business owners may have decent personal credit but do not pay anything related to the business on time and just bleed the business dry. How would anyone looking to do business with that business know that without looking at a business credit report? Everyone from landlords to lenders uses these reports every day, here in the United States and across the globe.
There are three reporting agencies, Dun and Bradstreet, Experian, and Equifax. Each credit facility may have their favorite while others may pull multiple reports, but you can be assured that someone is looking at yours. Experian and Equifax don’t require much information to start a report and the lack of information may cause a low score, or someone may have reported some derogatory information that may cause a negative report thus affecting your business.
Building business credit also has many benefits, business cards for retailers, office suppliers, fleet cards (keep vehicle expenses and repair separate), cash cards, and a host of other benefits. It also makes your business more valuable to buyers, makes expansion money easier to access and it will provide that rainy day fund that will protect you from emergency expenditures.
I have included a link to download a free e-book on the importance of Business Credit and how to build it.
The Ebizmore Accounting Program is designed to handle the business’s back office including building the business and the owners personal credit. Contact us to set up a free consultation or if you are interested in learning more about financing for your business, please contact us at email@example.com. Remember at Ebizmore you will Learn More, Do More and Earn More.