Many resourceful entrepreneurs begin with great ideas that can transform a small business into a big business. While small business owners can be very good at coming up with creative ideas, they are often at a loss when it comes to managing the actual business and the implementation of these ideas, which requires understanding the accounting, taxes, payroll and financing necessary to achieve lofty business goals.
A business line of credit and access to capital cannot be underestimated — this should not be confused with a personal line of credit. After all, as many know, a strong credit score (for your business) can help when financing and/or loans are needed. According to the Small Business Administration, (SBA) “… insufficient or delayed financing is the second most common reason for business failure. “
Working capital is critical to the success of any business – below are some tips:
- Most small businesses should always hire an accountant or business manager (even if they are part time or a consultant) who can help you manage expenses, pay taxes, and ensure you keep a good line of credit.
- Dunn & Bradstreet (D&B): The SBA suggests that small business owners “…should first know if they have a business credit file with D&B.” You can find this information by calling D&B Customer Service at 1-866-785-0430.
- Make sure all business expenses, from office supplies to meals with clients, are put only on business credit cards. Try not to use your personal card for business expenses as it a lot easier when it comes to doing “the books” to merely look at the business cards versus a mix of cards and decided which expenses apply or don’t apply to the business.
- Make sure to pay your monthly fees so that your business credit is standing is good — which as mentioned above, helps when applying for any loans or financing.
- The SBA also advises that either the small business owner, manager or accountant keep track of activity on the business credit card as 15-30% “…of all commercial credit losses are due to fraudulent activity.” Unfortunately this is a reality in these days with identity theft are all too often.
- Don’t just take on any customers! Make sure to research your potential customers and if you are not certain, ask for a credit check or at least have them give you a down payment before you start on a job. Why? You want to make sure they pay your bill on time. Without active cash flow into the business, it will be harder to make the necessary payments on your business credit cards, not to mention all the other business expenses…which in turn can gravely hurt the company.