Planning and starting a business can be difficult. It is the dream of millions. There are people who begin to create a business, either on paper or in their minds and yet, never get around to launching. Oftentimes what holds a person back is lack of capital, or financing. Others never get around to it because of the risk, or perception and fear of risk of losing their own money and/or that of people they have asked to invest such as family and friends.
However, three are other ways to raise capital. With careful planning, thought and effort, it is possible to raise the necessary capital to get a business off the ground, and that is by building your business credit. By doing so you can borrow against the business rather then from personal assets.
Carefully Produce a Business Plan and Structure
Setting up a business through business credit is completely different from consumer credit.
The most difficult step in building business credit is to convince potential lenders that you are trying to achieve and set up a viable venture. That means the preparation and quality of your business plan is important. In order to set up a proper business structure, you must make sure that the prerequisites including licenses and all documentation are in place. You can use the business plan to show your lenders that you have placed a deep thought about the several elements in a business: the competition, pricing, products and the markets. If you are not sure about the business plan, you can always hire an advisor but it is critical to prepare yourself for the defense of your sales projections and the estimated costs of the start up and running your new business.
Be an Excellent Credit Customer
There are materials that you will need before the business can become a reality and these are: the services, equipment, stocks and several other materials necessary for the business. Be on the lookout for vendors who are willing to grant you credit. Find vendors that will be able to report your credit history to major business credit reporting agencies. Good credit scores are essential to establishing a good track record and achieve a good credit rating. By establishing credit in the name of your business you can show you are a good risk. Most lenders will not give money to a company/individual without a good credit rating. The sooner you start to establish your credit, the easier it will be to borrow money when you need it.
A Credit Assessment
The credit assessment determines if you are able to comply with the lender and the credit bureau’s requirements. That is why its important to look for vendors who are willing to businesses issue credit without the need for an established business or personal credit checks or guarantees. Once you are able to transact the business with credit vendors, you will be able to use those references in order to build your credit profile with the agencies for credit report.
Find mentors to help you establish business credit. Look to the Small Business Administration for help. The SBA lends small businesses money and helps with business plans and more.
You can also utilize the advice they can give about pitfalls and disadvantages of starting a business to help you better prepare for the future.