- Posted by Jeff Vacek
- On April 14, 2016
- 0 Comments
- Business Credit Tips, Jeff Vacek, Small Business Funding
A small businesses’ success or failure, often times depends on its Business Credit, as much as, marketing and sales. Especially during the start up phase.
Establishing a good Business Credit profile is an essential link to your company’s credibility and success.
However, many business owners forego this and attempt to establish their company’s reputation thru accreditation from various consumer oriented rating agencies like the Better, Business Bureau (BBB). While having an ‘A’ or higher rating with the BBB maybe appealing to consumers, ignoring your business credit score could be a fatal mistake.
The Small Business Administration is uniquely positioned to identify the biggest obstacles entrepreneurs face. According to the SBA, the Top 10 most common reasons small businesses FAIL are as follows:
- Lack of experience
- Insufficient capital (money)
- Poor location
- Poor inventory management
- Over-investment in fixed assets
- Poor credit arrangements
- Personal use of business funds
- Unexpected growth
- Low sales
At least seven of the ten are linked to the misuse or lack of Business Credit, according to Gary Stockton Sr. Integrated Marketing Manager for Experian’s Business Information Services. As a Small Business Owner, it is imperative that you understand the importance of establishing and maintaining a good business credit profile; right along with a focus on sales, marketing, costs and staffing.
Anyone including, lenders, suppliers, potential business partners and even consumers can view your business credit profile and a healthy, positive one conveys your company’s trustworthiness to them. This can earn your company more clientele, whereas an unhealthy or nonexistent business credit profile may cause undesirable results.
Also, you need to be careful with this if you have an exit strategy of wanting to sell the business or merge with another company. Potential buyers and partners will take into the account the businesses credit standing and you wouldn’t want that to ‘poison’ a good acquisition or merger opportunity for your company.