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Your Business Credit
| Once you have the basics in place, I wanted to talk a little bit about setting up your business credit profile. Your business credit is not at all connected to your personal credit. Even if you have terrible personal credit, if you have the above items in place, a phone number that is listed with 411, a business address that is commercially zoned, and a Web site, you can be eligible for basic business credit which I am detailing in this section. As you start dealing with vendors, this will occur naturally, however it helps to be conscious of the fact that your business has a business credit profile so that you can take steps to age your profile in a favorable way so that when you do get to the point of wanting business credit, you are informed. Once you are at the point of having a physical address and a landline (even if you are a home-based business), start doing business with vendors that will report to your credit that you are a good paying customer. Following are two companies that you can do business with to purchase office supplies and other equipment - both of these companies report to the major reporting agencies (Dun and Bradstreet and Equifax) under your business profile. This is not related to your personal credit profile in anyway. Check out both of these sites and place an order. When you place the order over the phone, ask if you can get billed for the order. Sometimes you have to place one order before getting billed. Make sure that you use your business information on your order (business address, business phone, etc). When you get the bill, you will need to pay it in full within 30 days. Place an order every month or two and just build your relationship with them. Both have a standard credit limit of $1000 unless you get special approval. Just stay under $1000 outstanding, and after a year of good payment history, you should be able to get business credit with most venders. Most stores that you shop at have “commercial accounts” which you can apply for - this is essentially business credit. You can start exploring different credit options that can help grow your business when the time comes, however the first step is to start building a positive profile and you can do so by starting to do business with these two companies: Reliable Office Products - http://www.reliable.com Grainger Industrial - http://www.grainger.com In addition, as you start building vendors to serve different needs of your business, ask the businesses if they would consider offering you terms on your orders. Sometimes they will, sometimes they won’t but it does not kill to ask. Usually they will offer you Net 30 which means that they will send you a bill that you have to pay within 30 days upon receipt. Keep track of the businesses that you have credit with (in the notebook I suggested you maintain!) and once you have 2-3 businesses, create a credit reference sheet that you can offer people who are considering giving you credit. A credit reference sheet looks similar to a resume. It should be on letterhead (which you can just use an electronic template off the Internet, it does not have to be anything fancy) and it should have your business name, address and phone number. Underneath that would be your bank relationships (who you bank with for your business, your account numbers and how long you have had the accounts). Last would be your three references. This should be a document you have on hand and ready to fax or send someone if needed - having it ready and on hand makes you look very professional and with that, vendors would be more likely to issue you credit. Source: Content Machine | |
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