Can You Afford Not Having Business Credit?
Any business that you may be looking to start or that you have already started takes up a lot of time. However, the problem for many business owners isn’t a lack of ideas; it’s a lack of funds. Businesses are expensive to own and operate and they are very expensive to start up. Also many businesses close every year due to bankruptcy from having too many debts. If you run a business can you really afford to not establish business credit?
Many people believe that credit is actually more of a curse then a gift because of how far in debt you can become. This is true to a certain extent. If you can’t manage your corporate credit and finances you will most likely end up in debt. However that’s not due to credit that’s due to poor finance management skills. If you establish business credit at an early stage in your business you will be better off than if you didn’t have any corporate credit at all. You may wonder why this is since credit is really debt. Let’s say that you have a bad month of business and your business doesn’t have a lot of extra profit to fall back on. You can use your business credit to get a credit card or a line of credit to temporarily solve your problem. Using credit at the right time in the right manner can accelerate or even save your business.
Another problem that many first time business owners make is that they don’t incorporate their company. If the business that they are running goes in debt they become personally responsible to take care of it. For example if you have a business loan that you can’t pay it will not only go against your business but your person credit as well. Since you want to keep your business finances and personal finances separate you’ll want to become incorporated so that you’re not personally liable.
Therefore at some point you’ll want to get business credit through a credit bureau such as Dun and Bradstreet. By going through a credit bureau such as Dun and Bradstreet you’ll ensure that you can pay off any type of business loan that you may have rather than having to close down your business.
You do have to be careful with your business credit and how much of it you use. So can you afford to not have business credit? You should carefully weigh your answer and your options. The truth is with the cost of opening and operating a business along with the random events that can happen during the lifetime of your business you probably can’t. If you don’t have business credit you risk having to close your business and start over. Having business credit will allow your business to recover when times get tough and you need a little extra help. You just have to remember to be smart when you use your credit and not overspend or overcharge. Otherwise you may end up even further in debt.
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