Steps to Business - Business Plan & Credit
High Priority Steps to Business & Survival
Risk/Control Management and Planning During the Global Credit Crunch
For the past several years, we have been getting business credit as much as we can. And we have started with this credit accumulating exercise before the global credit crunch!
Why? We strongly believe that you can only get small business credit in times when you don’t need it and that it is nearly impossible to obtain credit during times you really need it!
Obtaining business venture capital is one of the important steps to business – and will always be.
As a matter of fact, this is how banks have started hundreds of years ago – successful merchants started to lend money to other merchants and eventually even to governments! (Seems this practice has been turned around with governments bailing out the banks now!)
Of course, credit doesn’t maximize profit but it can make your small business successful. Business startup credit is not profit, but it enables an entrepreneur to make the necessary financial outlay to conduct business, to make a profit on the long run and to have a successful small business eventually.
But what is the way forward in this economic crisis? Is it possible to obtain credit during the global recession?
I believe it is still possible - though significantly more difficult than in “normal” times… Here are a few business survival tips and steps with regards to credit for business startups:
Though the credit crunch has come down on credit cards users as well, I still believe that the use of credit cards is a more easy way of getting business credit.
Try using credit cards as far as possible (Of course, if you are planning a company requiring a huge amount of startup credit, credit cards won’t be sufficient). Normally, credit cards have several advantages.
Among other things, you only have to pay the minimum due amount every month. If you leave enough money in the account for interest deduction, you can utilize the rest of the money again – every month. By doing this, you will build an excellent credit record – something that you as entrepreneur cannot neglect as it is considered as an asset in the long run.
Further, you can get credit cards in your own name - especially if you are in a situation where you still have a job. You might be able to use your job to secure credit cards and credit limits.
As a result, you can use the money from your credit card to finance your business. This is the more preferable option, in my opinion, as banks were extremely reluctant to lend money to small businesses during the “normal” times; so much more now during the current global recession. The advantage is that you won’t have to deal with a bank manager looking over your shoulder the whole time, threatening to close you down just because your cash flow looks bad in his opinion!
However, getting business credit by using credit cards will only work if you are 100% diligent in paying your minimum due amounts, WITHOUT a single default, every month, on time! And, of course, you need to make sure that you use your credit in line with any possible national legislation enacted by your country.
- Make use of Family Credit
If you really have difficulty to obtain credit cards or if you need a huge amount of money, you might want to consider turning to your family or friends as potential investors or partners. This will especially be helpful during the global recession. In difficult economic times people tend to turn to family members for help.
Actually, this is not a bad idea as family business enterprises are considered as the backbone of most countries’ economies.
Finally, if you have managed getting business credit, you, however, have to pay attention to another critical business pitfall: the risk of needless outflow of credit. As it is most of the time other people’s money, some business owners, unfortunately, tend to spend this money left, right and center.
Nevertheless, there is one more cause of needless outflow of credit. Business threats… Threats are agents in- and outside your business that cause damage and loss in a company. If you don’t control it, you will lose money and eventually experience profit loss. For more information about the benefits of small business control, please visit: http://www.business-around-the-globe.com
To Top
