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5 Credit lessons for small businesses

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By: Joy Mali
on 5th Jul,2017

Taking the jump into entrepreneurship by becoming the owner of a small business is a journey not to be taken lightly.
5 Credit lessons for small businesses

Taking the jump into entrepreneurship by becoming the owner of a small business is a journey not to be taken lightly.

It opens up worlds that have been previously unthinkable, from being able to work your own hours to not having to worry about answering to someone higher than you.

It’s the freedom of owning your own company that creates the paradox of how intimidating small business financing can become.

However, you need to know how credit works for your company.

1 Obtain your credit report

There is much more behind the scenes when running a business than it may look from the outside.

The first lesson in building credit for a small business is to physically obtain a copy of the credit report of your company.

This is going to be the starting point in deciding where you want the business to go and what to keep in mind with all future endeavors.

Through adapting an understanding of the material that makes up your credit report, you can make all future decisions regarding how they might negatively or positively affect your score.

Not going into things blindly is an imperative move in learning how to maintain your business finances.

2 Keep personal and business affairs separate

Being a business owner, it can sometimes be an easier option to simply whip out your own personal credit card when making purchases for your company.

If you find yourself doing that more often than not, it may be time to look into getting a small business credit card.

Putting your own credit and finances on the line to support your business - as heroic and worthy as it may be - is not advisable. However,it may be a little difficult to keep records in order and to keep your personal life separate from your business.

Choosing to get a separate card for your company will make things much more organized and easier in the long run.

3 Consider a small business loan

Sometimes the only option at hand may be the most intimidating. If you’ve consulted with your team and professionals, and together have garnered a business plan that everyone is confident will succeed, the only way to know for sure is to go all in.

Even if your company has bad credit, small business loans might still be an option to consider.

Of course, every situation is dependent upon the individual nature of the business. So, while a small business loan may not be a good option at one point, it might be something that could be reconsidered later on down the road.

5 Network with other business owners

While it may not seem obvious at the start, learning how to network with other business owners can provide you with a deep understanding of how others go about maintaining good credit in their businesses.

There is no need to let them in on sensitive information, of course. This is a method to learn how others have chosen to go about running their business.

It may just be possible to hear things that you have not previously considered, allowing you to grow in the process.

While there is no need to get a credit score of each individual, yet it’s a great opportunity to hand out business cards and learn your way around the trade.

6 Document everything

This is a lesson the importance of which is often not learned until something bad has already happened.

It is essential to keep every receipt, report, transaction, etc. to build a steady foundation to fall back on in case anything bad happens.

Lawsuits and credit discrepancies are a headache to be dealt with, but as long as all of your information has been kept well organized and in order.

Lastly, owning a small business can completely change a person’s world - these lessons are to ensure that the change is for the better. Keeping all of these in mind can help to ensure a stable business and good credit.

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