Build Business Credit – The Essentials on Why and How

Why Build Business Credit?Simple. Because it establishes a solid business foundation that gets you “APPROVED.” It doesn’t matter if you’re a new or seasoned business owner. One day financing will become one of your primary concerns.It’s just like how we eventually learn the importance of our personal credit. We know that our personal credit must be at a certain level in order for us to get approved for a car or a home.In fact, if you never build credit for your business, you’ll be stuck with using your personal credit for practically every business financing opportunity. That’s why many business owners suffer from poor credit to this day. It’s because of over-leveraging their personal credit.Here is the difference when you build business credit.Lenders can evaluate your business credit profile to get you approved instead of your personal credit. They’ll base the terms of the loan on the creditworthiness of your business instead of you personally.More benefits are…1.) You can maximize your access to cash since loan approvals are almost automatic.2.) You can get the best possible credit terms including low interest rates and fees.3.) You can reduce your expenses by improving the flow of cash infusion into your business.4.) You can enjoy peace of mind since it protects your personal assets and reduces your personal liability.These are really just a sample of the benefits that you can receive.To enjoy these benefits, it’s absolutely essential that you build a solid credit profile. Then you’ll be in a position to open up more opportunities for yourself and the growth of your business.Information Established By Your Business Credit RatingThese are the type of data lenders will review on your business credit profile…

The date you started the business
Information on the leaders in your company
The number of employees
The past financial behavior of your business and predictions of future behavior.
Building Credit – How ToAs mentioned earlier, building a good credit profile results in many advantages for you and your company.It will assist in securing lines of credit, credit cards, as well as any other business loans that you apply for.It will help you to secure future financing with a credit supplier.It can even assist you in purchasing supplies and/or investment property to use in the day to day operations of your business.At this point, you may think to yourself, “Ok, it sounds good, but how do I build business credit to begin with?”Here are fundamental tips to help you build business credit:1. Create and establish a business profile. One of the best ways to do this is to incorporate or create an LLC.2. Obtain an “EIN.” It’s a federal “employer identification number” that identifies your business like a social security number identifies an individual.3. Ensure that you have a copy of all the licenses that your business is required to obtain by law.4. Obtain an official telephone number and location associated with your business operations.5. Create a Web site and business email address.6. Open a business checking account with a financial institution.7. Create a profile with the 3 major business credit bureaus.8. Establish a positive reputation by paying bills on time among creditors such as vendors, retail businesses, small retail credit cards, major credit cards, and major financial institutions such as banks.9. Deal with companies and agencies that report to the 3 business credit bureaus.10. Limit credit use in the early days of operation to avoid falling into the trap of too much credit.Remember, even with a poor personal credit history, you can successfully develop a positive credit history with your business.If you follow the steps above you’ll begin to build a solid business credit foundation that gets you “APPROVED!” Having the financing you need when you need it will ultimately allow for many opportunities to achieve the success that you desire.

What a “Business For Sale” Really Means

Having a business for sale can mean a lot of things – more than people might think. How does one business value compare to another, and how to arrive at that value? Because there are many types of businesses that exist for many different industries, it stands to reason there are numerous ways of approaching the process to find the value.There are the three main approaches to value, which are the income approach, the market approach, and the asset approach. There are variations of these approaches, and combinations of them, and things which must be looked at because each and every business will have variations of what gives the business worth, and some of these differences are substantial.First we must identify the type of sale: stock sale or asset sale. A stock sale is the sale of the company stock; the buyer is buying the company based upon the value of its stock, which represents everything in the business: earning power, equipment, goodwill, liabilities, etc. In an asset sale, the buyer is buying the company assets and capital which enable the company to make profits, but is not necessarily assuming any liabilities with the purchase. Most small businesses for sale are sold as an “asset sale”.Our question, when selling a business or buying a business, is this: what are the assets considered to arrive at an accurate value? Here we will look at some of the most common.1. FF and E: This abbreviation stands for furniture, fixtures, and equipment. These are the tangible assets used by the business to operate and make money. All businesses (with a few exceptions) will have some amount of FF&E. The value of these can vary greatly, but in most cases the value is included in the value as determined by the income.2. Leaseholds: the leasehold is the lease agreement between the owner of the property and the business that rents the property. The agreed upon leased space typically goes with the sale of the business. This can be a significant value, especially if there is an under market rate currently charged and the lessor is obligated to continue with the current terms.3. Contract rights: many businesses do business based on ongoing contracts, agreements with other entities to do certain things for certain periods of time. There can be immense value in these agreements, and when someone buys a business he or she is buying the rights to these agreements.4. Licenses: in certain business sales, licenses do not apply; in others, there can be no business without them. Building contracting is one of them. So is accounting. For a buyer to buy a business, his purchase includes either buying the license to the company or the license to the individual. Often times, the buyer will require the access or availability of the license as a contingent element of the sale.5. Goodwill: Goodwill is the earnings of a business above and beyond the fair market return of its net tangible assets. In other words, whatever the business makes in excess of its identifiable assets is considered “goodwill” income, where there exists a synergy of all of the assets together. This one can be tricky. Most business owners assume they have goodwill in their business, but goodwill is not always positive; there is such things as “negative” goodwill. If the business makes less than the sum total of its identifiable assets, there exists negative goodwill.6. Trade secrets: some businesses are all about secrets. The reason the business is in operation may be because of a trade secret, some aspect of a product or service that sets it apart and gives it a market. In a business purchase, these secrets have value and go with the sale.7. Trade names, telephone numbers, websites, and domain names: some businesses generate business simply because of its name and identifiable aspects. If those were to change, so would the profits. So in buying a business, the buyer will have need of those names and numbers to continue on in business. Of course, in some cases these things would not matter at all, and that is why each one must be approached individually.8. Works in progress: a construction company may have a multi-million dollar job going on at the time of the sale, which can take months to complete. In case such as this, the buyer would have need of continuing on in the particular job the company was engaged in; for money and for reputation. This is considered a work in progress and has value and therefore is considered an asset and made part of the sale.9. Business records: the history of a business detailed in documents and spreadsheets must necessarily become part of the business sale. The new owner can make use of records in identifying progress, tracking increased or decreased sales, adjusting expenditures and depreciation rates, etc. When someone purchases a business, they are buying the current operation and all the details that led to it.10. Real estate: the seller-owned property on which the business does its business is inherent to the operation and therefore the value. There are times when the new buyer needs to move the business to purchase it, but more often the real estate is viewed as a major aspect of the business value, especially if there is equipment attached to the property and buildings suited specifically to the business.When a business for sale is valued by a professional appraiser, a business broker, or a business owner, more than just the income is considered. Assets, economic values used by the business to produce revenue and profits, are weighed heavily to determine the worth of the business. And they must be considered to understand what a “business for sale” really means to a buyer.

How to Think Differently in Business

To hit gold in business, you have to think gold. What is your business all about? How do you intend to maximize profits? Here are tips on how to think different in business:Think back to the futureDon’t wait till the harsh business storm hits your business; rather, always think of what to do better or next. For example, what are the things you need to put in place to ensure business growth? What stage is your business on the business chart, that is, in areas of development, growth or decline? Is your business vision realistic? What is your current profit margin? What is your intended profit margin? How do you intend to speed up your productivity? Evaluating your business, keeps you prepared for the future.Believe your ideas are valuableAlways think your glass is half full. Think about possibilities not only about likely constraints. As a business owner, you have to nurture a positive mental attitude; believe things will work out fine. If there are possible risks, device means to avoid or manage them. Risks are unforeseen, but you can plan ahead to avoid or mitigate them. Being positive in business enables you take a chance on yourself, be bold to take calculated risks, and believe you are adding value, even when the numbers say otherwise. That is a way of thinking differently in business.Dig beyond your current offeringsDo not just view things on the surface. Think intensively and carry out research on other ways your business can benefit your target market. Reflect on the true realities of where your business stands at the moment. What are your business challenges? Classify them and analyse them to see how you can make a difference. Outline your business SWOT analysis (Strengths, weaknesses, opportunities and threats). Go beyond the surface; be realistic.Your competitors are watchingUnderstand your business environment; be familiar with your competitors’ strategies – if you are not, you can bet that your competitors are doing their homework. What resources do they have that surpasses yours? How can you leverage to collaborate and partner to get the necessary resources? What’s the best way to build more goodwill? Do a survey on your business, and be cautious of the events happening in your business environment. It’s business, so be prepared for the competition. Business is about profit making and goodwill, be focused on these objectives.Create a war-roomNow that you know who your competitors are and understand your type of business. Identify the threats and evaluate them. Compare your business to your closest competitor. Be battle-ready. Draft a graph of your sales and profits. Can your business survive in business storm or in an unstable economy? Figure out what you can do better? What is not working? Are your key employees performing as expected? Carry out a performance appraisal. Take action: pave the way for more business improvements, do some advertisements, up your business game. Remember it is a game of profit, and that should be your aim.Thump your chestWhat makes you outstanding makes you great. Build on your business competence and promote it. Every product or service must have its own uniqueness, that thing that makes it different from others. Device means to make your business goals and objectives unique. Distinctive competence is that special attribute that shows how your business is similar to your competitors, but different in aspects of branding, concept and product offerings.Business is nothing without profits. A business seed can only grow if the business soil is fertile, and the fertility starts from your business thoughts. Be better by thinking differently.