Bad Credit Business Financing and You: How to Make It Work
Business owners with bad credit are put into a predicament that can create conflicts of priorities surrounding expenses. If cash flows are not broad enough to finance projects, often they will have to be cancelled or scaled down, but knowing what to cut and what to preserve is often difficult. When a small business is the combination of many separate departments, it is essential that communication avenues are streamlined in order for a comprehensive budget to be created. Here are some strategies to employ in order to keep your small business’s ability to function safeguarded through the credit recovery process.
Create a detailed budget report for each of your essential departments. While some small business owners will simply dump all of their expenses into one balance sheet and then reconcile it with their revenues, it makes much more sense in terms of deciding where to allocate a budget to break down expenses into departments. For example, if you find that your marketing is being severely neglected, while one of your pet product lines is losing you money based off of costs, it could be time to divert your resources into exposure creating projects and away from a premature development project.
Understand your capital options. Making sure that you have a plan in place in the event that you need external capital to finance a gap in sales, the hiring of important personnel or the purchase of new equipment is a prudent move. As much as possible avoid bounces on your bank statements, and make sure that you are able to support the costs of higher risk dollars. Bad credit business financing is a tool that business owners should add to their roster in order to maximize their ability to engage with time sensitive opportunities.
Consider creating an LLC. in order to protect your personal assets. If your business is simply a DBA, that might not be enough protection for assets like your home or your car in the even that you default on your existing loans. An LLC. will offer you more protection for your personal finances, something that small business owners should seriously think about, especially if they have credit issues.
Create some goals. Short term and long term, never take your eyes off the prize. As a small business owner, defining a goal that you can strive for every week will allow you to remain motivated and keep your head clear when dealing with the health of your business. The satisfaction of completing short term goals will also help you better reach for the ones you set for yourself for the long term.
Photo Credit to Jacob Botter on Flickr