It happens every single day and often kills small business owners without a great credit score.
This morning’s Wall Street Journal’s did a great story on free credit score reporting. I know you have multiple issues you manage on a daily basis, but hey, this is about bottom line profits. There is nothing more important.
Your credit score will ultimately have an impact on profits and sales, so focus. The impact of your credit score is not noticeable to most owners until it becomes expensive. As a business owner there are other levels of complexity which I’ll develop in a future post. Today I’ll just illustrate the financial importance of your credit score.
Your FICO score not only impacts the availability of capital for a small business,(which could save your business one day) it has direct impact on your profits as well. Because this is an abstract concept for most, let me give you a specific look at the financial rewards of strong personal and business credit.
Last week I helped a business owner secure an equipment lease for a new machine he wanted so he could expand into a more profitable business segment. His credit score of 620 (below average) provided a bit of a challenge, but we were successful with his equipment financing. He elected a 5 year lease with a monthly payment of $1,025. He was thrilled because his return on investment was significant.
Here’s where I hope to get your attention:
The exact same business owner with a 720 FICO score would have been offered a lease with a monthly payment of $836 per month. Over the 5 years his equipment lease, he would have saved $11,340, his monthly cash flow would have been improved by $189 and his ROI would have been even more impressive.
I realize there are many issues that demand your attention each day and it is easy to ignore issues that are not burning. Don’t! Maintaining your credit score is relatively easy and will have an important impact on the profitability, and maybe even the survival, of your business.
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