My mother always told her children, “To much of anything is not good for you”. My favorite retorts were always, “what about clean oxygen” or “drinking pure water”?
Well, last month a contestant in a radio station promotion died from drinking too much water to quickly. As it turns out, my mom was correct about a lot of things.
I bring this up because having access to unlimited business capital initially seems to fall into the category of “more is better”. However, the way you are probably going about it can be lethal to your business.
Most business owners personally signed for all of the business loans and credit they have for their business. Their personal guarantee causes two significant problems. First, it will eventually squeeze you financially – both personally and professionally. We’ve had clients unable to refinance their home because of their personal guarantees on business debt. Excessive personal debt, even if it is for your business, will drive down your credit score making capital almost impossible to obtain and expensive if you can.
Secondly, and more importantly, with your personal guarantee, you loose the power to walk away from any business failure. You have given your business to potentially devastate your personal financial life on top of everything else.
What ‘s the solution? You need to develop a long-term plan to build, develop and enhance your business standing and borrowing ability. Business credit, just like your relationships and reputation takes a while to build. It is not an overnight process, but the long-term benefit to your company will be well worth the effort.
Where to start? Visit Dunn & Bradstreet, the company that provides business credit reports and a lot more as you will see. After you visit their site, and are frustrated by too much poorly organized information, send me an email and I’ll forward our report on building strong business credit.
It’s not glossy, sexy or exciting stuff, but if you want an easy, turn key, step-by-step guide to positioning your business to have access to working capital, equipment leasing, credit lines or other forms of business capital, it is a must read.
We’re putting finishing touches on our updated version now, and will be happy to forward you a copy as soon as it is complete. Send an email request and we’ll get a new copy to you as soon as it is ready.
