As a small business owner, you have invested ample time, money and energy into your business. You obviously want to set your business up for success. Since most small business owners are not accountants, they may not realize how much credit can impact their business. This lack of knowledge is frequently the cause of many small business failures. Often one of the best ways to achieve success and longevity as a small business is to improve and manage your business credit diligently. Here are 5 reasons for small business owners to focus on managing their business credit for long term success.
- Good business credit can ensure that you are able to get the financing you need, when your business needs it. The better your credit is, the more reasonable loan rates will be and the faster you will be able to get approved for a small business loan. Insufficient or delayed financing is not only frustrating and inconvenient, but may completely put your plans on hold, restricting your small business’ growth significantly. If your business has a poor credit rating, you credit card rates may also increase dramatically, making it very unaffordable to do business with your clients and reducing your profit margin.
- Many businesses need to purchase supplies in bulk. These supply companies check business credit to make sure you are reliable and this is how they determine your business’ credit line. If your business has poor credit, you may only be able to get a credit line that is half of what it would have been had you focused on maintaining strong credit.
- Managing your small business credit also relies on the need to evaluate the credit of your customers. Having security in their credit can allow you to develop a more trusting relationship. This can help you focus on working with people who have strong credit while avoiding work with those who pay slowly or unreliably and could damage your financial situation.
- Managing your small business credit is also great for staying on top of and avoiding identify theft. If you aren’t actively involved in your financial situation, you company could be harmed by identity theft and you may not know until it’s too late! A large percentage of commercial refit loss is often due to fraud, so be diligent about checking regularly to protect yourself and your business.
- Finally, maintaining good credit improves your reputation in the business world and in the community. The other businesses and people you work with will be happier to continue doing business with you if they know you are reliable, honest, punctual, and fair. You will be able to run a business that you feel proud of in all regards and you will feel stable and secure in your finances, providing you with peace of mind.
Clearly, managing your small business credit and taking the time to build business credit have numerous benefits to you as an owner. You can improve relationships, secure finances, lower loan rates and more. Be sure to work with a financial advisor or accountant if you need help getting started with credit management.