Tag: Business

Is it Possible to Get Business Funding for Bad Credit?

Do you need business funding for bad credit? You may feel that – or you may have heard – that you can’t get business funding for bad credit. 

The best, easiest, and fastest way to do so is to build business credit. Because then your bad credit won’t matter quite so much.

Any Small Business Can Get Business Funding for Bad Credit

Company credit is credit in a small business’s name. It doesn’t connect to a business owner’s personal credit, not even if the owner is a sole proprietor and the sole employee of the small business. 

Consequently, an entrepreneur’s business and consumer credit scores can be quite different.

The Advantages of Business Funding for Bad Credit

Considering that business credit is separate from consumer, it helps to secure a business owner’s personal assets, in case of court action or business bankruptcy.

Also, with two distinct credit scores, an entrepreneur can get two separate cards from the same merchant. This effectively doubles purchasing power.

Another advantage is that even startup businesses can do this. Going to a bank for a business loan can be a formula for disappointment. But building business credit, when done the right way, is a plan for success

Consumer credit scores depend on payments but also various other components like credit use percentages. 

But for business credit, the scores really merely depend on if a small business pays its bills on a timely basis.

The Process 

Establishing company credit is a process. It does not occur automatically. A company must actively work to build business credit. 

Having said that, it can be done readily and quickly, and it is much swifter than developing personal credit scores. 

Merchants are a big part of this process.

Accomplishing the steps out of order results in repetitive denials. No one can start at the top with business credit. For example, you can’t start with retail or cash credit from your bank. If you do, you’ll get a rejection 100% of the time.

Business Fundability

A small business must be fundable to loan providers and vendors. 

Therefore, a business needs a professional-looking website and email address. And it needs to have website hosting bought from a vendor like GoDaddy. 

In addition, business phone numbers need to have a listing on 411. You can do that here: http://www.listyourself.net. 

In addition, the company phone number should be toll-free (800 exchange or the like).

A small business also needs a bank account devoted only to it, and it has to have all of the licenses necessary for running. 

Licenses

These licenses all have to be in the identical, correct name of the small business. And they must have the same business address and telephone numbers. 

So note, that this means not just state licenses, but possibly also city licenses.

Business Funding for Bad Credit Credit Suite

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Working with the Internal Revenue Service

Visit the Internal Revenue Service web site and get an EIN for the company. They’re free. Pick a business entity such as corporation, LLC, etc. 

A business may get started as a sole proprietor. But they absolutely need to switch to a sort of corporation or an LLC. 

This is to lessen risk. And it will maximize tax benefits.

A business entity matters when it involves tax obligations and liability in case of a lawsuit. A sole proprietorship means the owner is it when it comes to liability and tax obligations. Nobody else is responsible.

The best thing to do is to incorporate. You should only look at a DBA as an interim step on the way to incorporation.

Kicking Off the Business Credit Reporting Process

Begin at the D&B web site and get a cost-free D-U-N-S number. A D-U-N-S number is how D&B gets a company in their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s websites for the company. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process. 

By doing this, Experian and Equifax have activity to report on.

Starter Vendor Credit

First you ought to establish tradelines that report. Then you’ll have an established credit profile, and you’ll get a business credit score. 

And with an established business credit profile and score you can begin to get credit for numerous purposes, and from all sorts of places.

These sorts of accounts often tend to be for things bought all the time, like marketing materials, shipping boxes, outdoor work wear, ink and toner, and office furniture.

But first off, what is trade credit? These trade lines are credit issuers who give you starter credit when you have none now. Terms are in most cases Net 30, rather than revolving. 

Therefore, if you get approval for $1,000 in vendor credit and use all of it, you need to pay that money back in a set term, such as within 30 days on a Net 30 account.

Details

Net 30 accounts must be paid in full within 30 days. 60 accounts must be paid fully within 60 days. Unlike revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you made use of. 

To start your business credit profile the proper way, you ought to get approval for vendor accounts that report to the business credit reporting bureaus. As soon as that’s done, you can then make use of the credit. 

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit – It Makes Sense

Not every vendor can help in the same way true starter credit can. These are merchants that grant approval with minimal effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

As you get starter credit, you can also start to get credit from retailers. This is to continue to validate you are trustworthy and pay promptly. Here are some stellar choices from us: https://www.creditsuite.com/blog/5-vendor-accounts-that-build-your-business-credit/ 

Accounts That Do Not Report

Non-reporting trade accounts can also be helpful. While you do want trade accounts to report to at the very least one of the CRAs, a trade account which does not report can also be of some value. 

You can always ask non-reporting accounts for trade references. Additionally, credit accounts of any sort can help you to better even out business expenditures, thereby making financial planning less complicated. 

Store Credit

Store credit comes from a variety of retail service providers.

You must use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use the business’s EIN on these credit applications.

Fleet Credit

Fleet credit is from companies where you can purchase fuel, and fix and take care of vehicles. You must use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, make certain to apply using the company’s EIN.

Business Funding for Bad Credit Credit Suite

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

More Universal Cash Credit

These are companies like Visa and MasterCard. You must use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

These are usually MasterCard credit cards. With more credit, these are within reach.

Monitor Your Business Credit to Help Yourself Get Business Funding for Bad Credit

Know what is happening with your credit. Make sure it is being reported and fix any inaccuracies as soon as possible. Get in the habit of checking credit reports. Dig into the details, not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the CRAs. See: www.creditsuite.com/monitoring. 

At Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business.

Update Your Records to Make it Easier to Get Business Funding for Bad Credit

Update the data if there are errors or the details is incomplete. At D&B, you can do this at: https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm. For Experian, go here: www.experian.com/small-business/business-credit-information.jsp. So, for Equifax, go here: www.equifax.com/business/small-business.

Business Funding for Bad Credit Credit Suite

Learn more here and get started with building business credit with your company’s EIN and not your SSN.

Fix Your Business Credit to Increase Your Chances for Getting Business Funding for Bad Credit

So, what’s all this monitoring for? It’s to challenge any mistakes in your records. Errors in your credit report(s) can be fixed. But the CRAs typically want you to dispute in a particular way.

Get your small business’s PAYDEX report at: www.dnb.com/about-us/our-data.html. Get your company’s Experian report at: www.businesscreditfacts.com/pdp.aspx?pg=SearchForm. And get your Equifax business credit report at: www.equifax.com/business/credit-information.

Dispute Any Errors to Improve Your Chances to Get Business Funding for Bad Credit

Disputing credit report mistakes generally means you mail a paper letter with copies of any proofs of payment with it. These are documents like receipts and cancelled checks. Never mail the originals. Always send copies and retain the originals.

Fixing credit report inaccuracies also means you precisely detail any charges you contest. Make your dispute letter as crystal clear as possible. Be specific about the problems with your report. Use certified mail to have proof that you mailed in your dispute.

Dispute your or your business’s Equifax report by following the instructions here: www.equifax.com/small-business-faqs/#Dispute-FAQs. 

You can dispute inaccuracies on your or your small business’s Experian report by following the instructions here: www.experian.com/small-business/business-credit-information.jsp. 

And D&B’s PAYDEX Customer Service telephone number is here: www.dandb.com/glossary/paydex.

A Word about Building Business Credit and How to Get Business Funding for Bad Credit

Always use credit smartly! Don’t borrow beyond what you can pay off. Track balances and deadlines for payments. Paying promptly and completely does more to boost business credit scores than almost anything else.

Establishing business credit pays. Excellent business credit scores help a small business get loans. Your loan provider knows the business can pay its debts. They recognize the company is for real. 

The company’s EIN connects to high scores and lenders won’t feel the need to ask for a personal guarantee.

It is the simplest way to get business funding for bad credit.

Getting Business Funding for Bad Credit: Takeaways

Business credit is an asset which can help your small business for many years to come. It is the most surefire way to get business funding for bad credit. And, while you’re at it and improving your business credit, you may want to work on improving your personal credit. It is a similar process in the sense that you need to pay your bills on time, correct any errors, and add any missing information.

Because one way around trying to get business funding for bad credit is to stop having bad credit in the first place.

Learn more here and get started toward growing company credit.

The post Is it Possible to Get Business Funding for Bad Credit? appeared first on Credit Suite.

Raise Your Recession Business Banking Rates and Get Funding Even in a Bad Economy

Do You Need to Know Just How Banks Determine Your Recession Business Banking Rates?

Banks are in the business of judging your company’s creditworthiness. This has a direct relationship to several important issues. Ignore these at your peril! It pays to take the time to try to understand how your recession business banking rates will work.

Recession Era Funding

The number of American financial institutions and also thrifts has been decreasing gradually for a quarter of a century. This is from consolidation in the market along with deregulation in the 1990s, decreasing obstacles to interstate banking. See: https://www.fundera.com/blog/happened-americas-small-businesses-financial-crisis-six-years-start-crisis-look-back-10-charts

Assets concentrated in ever‐larger banks is troublesome for local business proprietors. Big financial institutions are a lot less likely to make small loans. Economic recessions mean financial institutions become more careful with financing. For this reason, you need to understand your business bank ratings. It’s the only way you will be able to improve them.

Your Recession Business Banking Rates – It All Has to do With Your Bank Credit Score

But what’s that all about?

Did you know there are many ways you can ravage your bank credit score? It is, regrettably, quite easy to run a power saw through your bank rating. Your recession business banking rates can easily end up taking a hit.

But before going any further, do you know the difference between bank credit ratings and small business credit?

Business credit is the full and complete amount of cash that your small business can receive from all manner of lenders. That means credit unions, credit card companies, and also renting businesses. And it also means vendors, under what’s called trade credit or vendor credit or trade lines.

A bank credit score, on the other hand, is a measure of the full amount of borrowing ability which a company can get from the banking system only.

Bank Credit Scores Explained

A company can get more business credit fast . That is, as long as it has at least one financial institution reference. Plus it must have an average day to day account balance of at the very least $10,000 for the most recent three months. This setup will generate a bank credit rating of a Low-5. So this means it is an Adjusted Debt Balance of from $5,000 to $30,000.

A lower score, like a High-4, or balance of $7,000 to $9,999 will not result in an automatic turn down of the small business’s loan application. But it will slow down the approval process.

What is a Bank Rating?

A bank rating is a measure of the average minimum balance as kept in a business bank account over a 3 month long period. Hence a $10,000 balance| will rate as a Low-5, a $5,000 balance will rate as a Mid-4, and a $999 balance will rate as a High-3, etc.

A company’s chief goal ought to always be to maintain a minimum Low-5 bank rating (or, an average $10,000 balance) for a minimum of 3 months. This is because, without at the very least a Low-5 score, most financial institutions will assume a business cannot pay back a loan or a business line of credit.

Yet there is one point to keep in mind – you will never see this number. The financial institution will keep this number in its back pocket.

The Bank Rating Ranges

The numbers work out to the following ranges:

To get a High-5 rating, your business will need to have an account balance of $70,000 to $99,999. For a Mid-5 score, your business has to have an account balance of $40,000 to $69,999. And for a Low-5 score, your company should hold onto an account balance of $10,000 to $39,000. So your small business needs this level bank rating or better to get a bank loan.

For a High-4 score, your small business needs to have an account balance of $7,000 to $9,999. And for a Mid-4 rating, your company must have an account balance of $4,000 to $6,999. So for a Low-4 score, your company will need to have an account balance of $1,000 to $3,999.

Your Recession Business Banking Rates – It Can Be Scary Easy to Damage Your Bank Rating

And now, without further ado, here are 7 ways you can leave your bank score in tatters. These methods can all too easily hurt your recession business banking rates.

7th Way to Ruin Your Bank Credit

Don’t maintain a minimum balance for at least three months. Since every bank score cycle has a basis in the last 3 months, a seesawing balance will harm your bank score.

6th Way to Ruin Your Bank Credit Rating

Don’t bother to assure that your company bank accounts are on report the exact same way as all your small business records are. And do not assume they are on report with the exact same physical address (no post office box) and contact number. Sow confusion here by editing one and not another, or not dealing with an error if there is one.

Recession Business Banking Rates Credit Suite

Have a look at our expert research on bank ratings, the obscure reason why you will – or won’t – get a bank loan for your company.

Fifth Way to Destroy Your Bank Credit

To support # 6, don’t make sure that each and every credit agency and trade credit vendor likewise lists the business name and address the precise same way. This is every keeper of financial records, earnings and sales taxes. It includes web addresses and email addresses, directory assistance, etc.

No loan provider is going to think of the myriad ways that a company may be listed, when they check out the business’s creditworthiness. So if they cannot find what they need fast, they will refute an application. Or it won’t be on the report to a company credit reporting bureau such as Experian, Equifax or Dun & Bradstreet.

For that reason, if they are not able to locate what they need quickly, they will simply reject the application. So make certain your documents are a mess!

4th Way to Damage Your Bank Credit Rating

Never handle your bank account responsibly. This means that your small business must not avoid writing non-sufficient funds (NSF) checks at all costs. Such is due to the fact that those decimate bank ratings. Non-sufficient funds checks are something which no company can afford to let happen.

Balancing checkbooks and accounts is so boring anyway. You’ve got adequate cash without even making sure, right?

Third Way to Ruin Your Bank Credit Rating

To add to # 4, do not add overdraft protection to your bank account ASAP, to avoid NSFs. Why bother thinking in advance or preparing for the future? Everything is going to be terrific permanently, right?

Writing checks insufficient funds (NSFs) is a sure way to wreck your bank score.

2nd Way to Damage Your Bank Credit Rating

Do not let your business show a positive cash flow. The cash coming in and leaving your business’s bank account should reflect a positive free cash flow.

A positive free cash flow is the quantity of revenue left over after a firm has paid all its expenses. According to Investopedia, it “represents the cash a company can generate after required investment to maintain or expand its asset base. It is a measurement of a company’s financial performance and health.”

When an account shows a positive cash flow it indicates your small business is generating more revenue than you use to run the firm. That means the bank will feel your small business can cover its costs.

So if you really intend to wreck your bank score, get whatever’s expensive for your company so your costs overtake your profits. Doesn’t every factory merit luxurious carpets in the loading dock?

Recession Business Banking Rates Credit Suite

Have a look at our expert research on bank ratings, the obscure reason why you will – or won’t – get a bank loan for your company.

First Way to Damage Your Bank Credit Rating

Financial institutions have quite the motivation to lend to a small business with consistent deposits. And an entrepreneur must also make regular deposits to keep a positive bank rating. The business owner has to make a lot of regular deposits, greater than the withdrawals they are making, to have and maintain a great bank rating. If they can do that, then they will have a great bank credit score.

Consistency is the hobgoblin of little minds, right? So be a free spirit!

Your Recession Business Banking Rates – It is Way too Easy to Destroy Your Company’s Bank Score – Even Though You Will Never See It

You, the entrepreneur must never make consistent deposits. And these deposits ought to never be more than the withdrawals you are making, to ruin your bank credit.

If you can do these things, then your company will have a horrible bank credit score. And then a bad bank credit score means your firm is much less likely to get small business loans. This is how you can truly muck up your recession business banking rates.

Your Recession Business Banking Rates – Just Kidding: Of Course We Do Not Actually Want You to Destroy Your Company’s Bank Credit Rating!

But your recession business banking rates are a thing of value. You should want to protect and nurture it. So, where do you go from here?

The First Great Way to Rescue Your Bank Credit Rating

Probably the easiest way to achieve and maintain an excellent bank credit rating is to deposit at least $10,000 into your company bank account. And keep it there for as much as six months. While you will still have to make regular deposits, this one simple step will assist in 3 ways. One, you will have kept an excellent minimum balance for at the very least 3 months. Two, you will probably not overdraw with such a great balance. And three, you will be at the magic minimum for a Low-5 bank credit rating. Thus you will be dealing with our # 4 and # 7, above.

And you may even have the ability to get around our # 3. But we still highly recommend overdraft protection.

Recession Business Banking Rates Credit Suite

Have a look at our expert research on bank ratings, the obscure reason why you will – or won’t – get a bank loan for your company.

The 2nd Excellent Way to Rescue Your Bank Credit Rating

A 2nd thing you can do is make certain your small business account details are consistent across the board, everywhere. While it may take some work order to make certain every little thing is right, you will be dealing with our # 5 as well as # 6, above.

The Third Great Way to Rescue Your Bank Credit Score

A 3rd thing you can do is make consistent deposits, as well as make sure they are greater than the quantities you are withdrawing each month. This will take care of our # 1 and also # 2.

Your Recession Business Banking Rates –Takeaways

Your bank score is not to be trifled with. The financial institutions maintain a mystery about them. Still, failing to keep your bank credit rating high will make it a whole lot harder to do well in business. In this way, you can defend and improve your recession business banking rates.

The post Raise Your Recession Business Banking Rates and Get Funding Even in a Bad Economy appeared first on Credit Suite.

How to Grow Your Local Business During Uncertain Times

No doubt this is a hard time to grow a local business. Coronavirus has likely forced you to make big changes to the way you operate. It’s almost certainly hit your bottom line too.

However, it’s still absolutely possible to grow your local business at a time like this. You just have to be smart about it. In this article, I’ll talk you through how to do that. First, though, here’s a bit of detail on why this is such a challenging time for businesses like yours.

The Effects of the COVID-19 Pandemic on Local Businesses

You’re probably sick of reading and hearing the word “unprecedented.” I know I am. Unfortunately, it’s just the best word to describe the current climate for local businesses.

By the end of March, 32 states had locked down in response to the pandemic. Two in five small businesses across the US had temporarily closed by this point, with nearly all of those closures due to COVID-19.

Closing your doors has big financial implications. It is concerning that the vast majority of local businesses aren’t in a position to handle even short-term pressure on their earnings, with around four-fifths only having up to two months of cash available to pay their expenses.

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Because of this, it’s hardly surprising that the number of active business owners in the US plummeted by 3.3 million (or 22%) in the two months from February to April alone. That’s the largest drop on record, and it affected practically every industry.

Luckily, if you have access to the right strategies (like local promotions) and tools (such as messaging services like Podium), you may still be able to grow your business even in these uncertain times.

Six Strategies to Grow Your Business During the Age of Coronavirus

The pandemic might have affected your business growth in any number of ways. Maybe you’ve been forced to shutter your store(s) for a certain amount of time. Maybe your customers are buying less at the moment. Or maybe the industry you’re in means you’ve barely even got a “product” to sell, like cinemas and travel companies.

Whatever the case, if you’re going to grow your local business in the current climate, you need to adapt. Here are tips on how to do it:

1. Use the Right Tools

I know what you’re thinking: “I’m already worried about cash flow, now this guy’s telling me to invest in a bunch of tools!” Well, what if I told you that by choosing the right tools (some of which are free, by the way), you massively increase your chances of growing your local business?

You likely know that there are thousands of tools designed to drive small business growth, but I’ve focused on the areas where you can really shift the dial:

Issue: Customer Messaging

There are so many benefits to improving your communications with existing and potential customers.

You can generate more reviews, which act as a trust factor and make your business more credible. You can collect payments faster and with less hassle. You can issue more timely (and more effective) reminders, reducing the chances of no-shows.

To solve your customer messaging you can use a tool like Podium. Here’s how I use it:

  1. Set up one inbox to rule them all: What’s the biggest barrier to better communications? Trying to keep track of all your different platforms. Customers could be messaging you via Facebook, Twitter, phone, and your website (and maybe a bunch of others, too). Podium brings all those communications together in one place, ensuring you never miss a message.
  2. Connect remotely with website visitors: Ever wish you could get closer to the people on your website? Find out what stops them from buying or converting there and then? With Podium, you can. Add live chat to your site and every time they ask a question, they’ll automatically move to a text conversation, so you’re no longer tied to your computer (and nor are they).
  3. Enable on-the-go customer service: You likely don’t have a dedicated customer service team. In fact, you might be your whole customer service team. So what happens when you’re not at your desk or in the store? Stuff gets missed! Podium allows you to text quick responses when you’re out and about, so you never leave anyone hanging.
  4. Chat face-to-face: Texting is great. But sometimes it’s just not the best way to respond to a customer or prospect. Maybe they’ve got a complex question or require a nuanced response that’s hard to tap out on your phone’s keypad. Podium offers video chat software that makes connecting remotely with customers as easy as sending a text. Send your customers a link and you can be video chatting in seconds, making it super simple to show details, answer questions, and share your screen.
  5. Create tailored promotions: Say you own a coffee shop. You run a loyalty program and you’ve captured your best customers’ email addresses and phone numbers. Wouldn’t it be great if you could quickly send those customers targeted promotions? Maybe offer them a deal on a new single-origin coffee you’ve just started stocking? You can do that as well.
  6. Provide to-the-minute advice and updates: There are a lot of variables in the world right now. Customers might want to know how busy you are at a certain time, or what measures you’ve put in place during the pandemic. Or they might have product-specific questions. A customer messaging platform makes it easier for you to respond in real-time.

Oh and an easy way to get started is to just sign up for a free Podium account.

Issue: Scheduling Meetings

No one likes scheduling meetings at the best of times. Throw coronavirus into the mix and it becomes even more of a challenge. Should it be in-person or remote? Which platform should we use? What date and time work best?

Meeting schedulers are designed to handle the legwork for you. One of the best is Arrangr, which reserves tentative meeting times, automatically frees up untaken slots, and can even suggest the ideal location for all parties.

Another great option is Calendly. Integrating directly with your Google or Office 365 calendar, it gives you a personalized URL that allows customers to see your availability and schedule their preferred meeting time. Best of all, there’s a basic free plan available.

Issue: Email Automation

You can’t grow a local business at a time like this without doing some marketing.

Unfortunately, you likely don’t have time to build and execute complex campaigns.

That’s why you need email automation software! One of the most popular tools, Mailchimp, helps you send effective email marketing communications at scale. In fact, Mailchimp claims to boost open rates by 93% and click rates by 174% compared to the average bulk email.

Customer Relationship Management

Your customer relationships have never been more valuable than they are right now, so you need to manage them effectively. To do that, you need to invest in a customer relationship management (CRM) tool.

There are a bunch of CRMs aimed at local businesses, but HubSpot Sales Hub is one of the most popular. It’s loaded with sales engagement tools, pricing functionality to help you deliver complex quotes, and analytics software to measure what’s working (and what isn’t).

2. Improve Your Digital Marketing Strategy

In more “normal” times, you might not put a lot of thought into your marketing. Maybe you just write the occasional social post or send a couple of email promotions a month.

During times of uncertainty, that just won’t cut it. People have a lot on their minds right now, so that one baseball gif you tweeted isn’t going to have much impact.

You need a proper digital marketing strategy.

Let me give you an example: you sell business supplies to other local businesses.

Because you’re small and local, your big differentiator is your flexibility and bespoke approach. You can source whatever product your customer needs, your delivery times are rapid, and you’re easy to reach. That’s the sort of stuff you talk about in your marketing emails.

Well, wouldn’t it be good if you made that the foundation for a whole campaign?

Maybe you create a bunch of case studies and testimonials that show your unique selling point, (USPs), in action. You build a mailing list of local firms you’d love to do business with, and drip-feed your content to those prospects. Because you’ve built a whole strategy, you know the best times to reach those prospects, the platforms they use, and the sort of messaging that resonates with them.

That approach helps you strike up a conversation, which ultimately means you may close more deals.

3. Make Your Google My Business Profile Shine

Want people to see your name when they search on Google for businesses like yours? If you’re reading this article, I’m guessing you do, and that means you need a (good) Google My Business profile.

Setting up a free profile makes it more likely that your business shows up in relevant searches, along with useful information like:

  • The type of service you offer
  • Your opening times
  • Your address
grow local business google my business

Once you’ve set it up, optimize your Google My Business profile by:

  • Ensuring your information is accurate and comprehensive
  • Sharing business updates, like new opening hours or product launches
  • Asking customers for Google reviews (and responding to them)

On that last point, I know it can be hard persuading customers to review your business. They’re busy. They don’t want to spend their valuable time seeking out your Google My Business profile or Facebook Business Page.

Podium makes it a lot easier, helping you provide social proof that demonstrates your brand can be trusted. Text customers asking them for a review and they’ll be linked straight to your Facebook, Google, and Tripadvisor pages, so there’s hardly any clicks (and hardly any work) for them. That’s why Podium has powered more than 15 million business reviews for its users.

4. Create and Execute a Local Paid Marketing Strategy

Sometimes it takes money to make money. If you’re serious about growing your local business right now, you’ll want to consider investing in some sort of paid activity.

Google Ads can be super effective for smaller firms, especially web-based businesses targeting online traffic and/or conversions. Local keyword phrases like “lawyers near me,” or “realtor in Denver,” are typically a lot less competitive than broader, non-geographic terms like “realtor.” That means you could get a lot of visibility and clicks with a relatively small outlay.

In addition to Google Ads, consider advertising on social platforms like Facebook and LinkedIn.  Social ads are less intention-based than paid search because your audience isn’t actively looking for the thing you’re advertising.

However, ads on social media often cost less than Google Ads. For instance, if you’re a law firm, you’re paying on average $10.96 per click on Google Ads, but on Facebook, that figure drops to just $1.32.

5. Use Analytics to Track and Improve Site Performance

When times are hard, you need to squeeze every last dollar from your potential customers. Analytics software (like Google Analytics) can help you do that by allowing you to identify trends, plan new strategies, and measure the results of your current efforts.

Let’s say you’re a mechanic. You’ve just added a page to your site to promote a special offer on new tires. A month later, you click into Google Analytics and see that a bunch of people have landed on that page, but your conversion rate is low.

You compare it to other, similar pages on your site. They’re performing much better. Now you know there’s a problem, such as:

  • Your current offer is priced too high
  • Your new page isn’t engaging or persuasive enough
  • You don’t make it easy enough for customers to convert, so they leave
  • You don’t provide enough detail about the offer

By comparing against better-performing pages, you can tweak your approach and improve results.

6. Conduct Local Community Promotions

Now isn’t a good time to invite hundreds of people to a big party. But there are definitely opportunities for community engagement. You just need to get a little creative.

Say you’ve opened a new store in a location you haven’t served before. Maybe you target properties within a certain zip code, or on certain streets, with a special offer that encourages customers to visit your store.

Perhaps in the age of social distancing, you’ve introduced a new takeout service. Why not give customers in your area 10% off their first promotion, or combine it with a loyalty scheme? Tailor your offer to what your customers want right now, then promote it on Facebook, in the local press, via email marketing, or through direct mail.

7. Optimize Your Social Media Accounts

There are dozens of social platforms out there, but when it comes to growing a local business, you want to focus on those that give you the best reach, like:

  • Facebook
  • Twitter
  • Instagram
  • LinkedIn
  • Pinterest
  • YouTube
  • Tumblr

Finding the right platform will depend on the type of business you run. On a basic level, if you’re B2B, LinkedIn’s likely your best channel. Otherwise, almost everyone is on Facebook, but if your product is highly visual you might see more success on Instagram, Pinterest, or YouTube.

Whichever platform(s) you choose, you need to identify some tactics that ultimately help you sell more, like:

  • Showcasing and/or auctioning your products on Facebook Live
  • Starting conversations with new prospects in LinkedIn Groups
  • Setting up Instagram Shopping so people can browse your products in photos and videos while in-app

Conclusion

Growing a local business is never easy, and it’s certainly a whole lot harder right now.

However, if you’ve set up your own business, you’re likely comfortable with hustling for results. You’re naturally entrepreneurial and you’re driven to make this work.

Combine that attitude with the right growth strategies, and execute them effectively, and there’s no reason why you can’t come out of the pandemic in a stronger position.

What plans have you put in place to grow your business? How’s it going for you so far?

The post How to Grow Your Local Business During Uncertain Times appeared first on Neil Patel.

How to Grow Your Local Business During Uncertain Times

No doubt this is a hard time to grow a local business. Coronavirus has likely forced you to make big changes to the way you operate. It’s almost certainly hit your bottom line too. However, it’s still absolutely possible to grow your local business at a time like this. You just have to be smart … Continue reading How to Grow Your Local Business During Uncertain Times

Get Business Credit Cards That Don’t Report on Your Consumer Credit Reports During a Recession Downturn

Get business credit cards during a recession downturn – coronavirus or no coronavirus, this could be the perfect time for you to build your business credit history. So here are excellent cards where you can do just that.

You Can Get Business Credit Cards That Don’t Report on Your Consumer Credit Reports Even During a Recession Downturn

Learn how to make sure your business credit cards don’t report on your consumer credit reports. It makes a difference with business credit funding! You need business credit cards that do not report to personal credit. Even in a recession downturn!

Many small business credit cards require that the business owner to personally guarantee the debt. Usually this person is also the cardholder, although not all the time. But you want to apply for business credit card without personal guarantee. Don’t blame you! It would be a lot better to get an unsecured business credit card no personal guarantee.

That means that if the balance is not paid off for the business, then the owner will end up being responsible for the entire amount. It also means that business account activity could potentially spill over to the owner’s personal credit reports. It stinks to guaranty business credit!

But this depends upon each card issuer’s policy.

Policy Considerations

Some card issuers only report activity to the cardholder’s personal credit reports in the case of the owner defaulting. And there are others which will report all activity. And they will not distinguish between positive and negative activity.

The easiest way to keep business credit activity off your personal credit report is to use a business credit card which does not report business activity to personal credit bureaus. However, the decision to use a card such as this should not be made lightly. But no matter what, you don’t want these cards to report on your consumer credit reports.

So, is how to get a credit card without credit.

Report Activity During a Recession Downturn

Which is better? It all depends upon your situation. If you pay your business card on time and avoid high balances, then a ‘business’ card that appears on your personal credit reports with Experian, Equifax, and TransUnion should not be a problem.

It could even help your credit scores.

Utilization Issues

But if you charge everything you can on your card in order to rack up rewards, then your personal credit could conceivably suffer. Credit scoring models will take into consideration your debt usage or utilization ratio.

This compares the reported balances versus available credit limits. It is often for each card as well as all credit cards combined.

A high balance on a business card which appears on your personal credit can mean a higher debt usage ratio. And that can lower credit scores.

And paying the balance off in full every month alone is unlikely to solve this problem. The reported balance is often the balance as of the statement closing date and not after a payment has been made.

Therefore, if you want lower balances to get onto the reports, you need to make your payments before either the statement closing date, or whichever date the issuer reports.

Some Small Advantages

However, if your personal credit history is lacking, a business card which reports your full account activity could help. Hence if you avoid credit cards and use a debit card, you may have a “thin” credit profile. It could benefit from the boost another card could provide.

Opting for a business credit card which does not report to personal credit may help if you know there will be times you need to run up charges putting you close to the limit or carry a balance.

This could be for anything from investing in new equipment to spending to prepare for a trade show. Of course you do not want that activity to bring down your scores.

Using a Business Credit Card that Doesn’t Affect Personal Credit in a Recession Downturn

Generally, it’s better to apply for the business credit card which offers rewards and benefits of the most interest to you, rather than focusing solely on the card’s reporting policy.

Furthermore, if you default, then having a business credit card which does not report regularly to consumer credit bureaus will make no difference. You will still end up personally liable for the debt on the card if you signed a personal guarantee. This is not the way to get credit cards for businesses with no personal guarantee.

And you want a business credit card no personal guarantee required.

If the card issuer brings a lawsuit against you for the balance or sends the account to a collections agency, then this activity will likely show up on your personal credit report. That can happen regardless of how any other payment information is reported.

Another option in a Recession Downturn

Another way out is to use business credit cards that do not require a personal guarantee. However, those are few and far between. These sorts of cards ask you, the business owner, to meet a set of conditions which can differ from one product to another.

These could be annual sales guarantees. Or they might be requirements to have an open Dun & Bradstreet file or other conditions. If you cannot meet these conditions, then this option will not exist for your business at all.

Finally, as always, it literally pays to separate your business life from your personal life, by opening separate accounts and even incorporating your business, in order to demonstrate to creditors that you and your company are not the same when it comes to credit.

Build Business Credit During a Recession Downturn

So the truth is the best way to get around these problems is simply to build business credit! Don’t settle for credit cards that don’t do what you want. And don’t settle for a corporate business card that say ‘business’ on it, but is really a personal credit card in disguise.

You want it when business credit cards don’t report on your consumer credit reports. And such cards would not be them.

Every Small Business Needs Company Credit Building

Business credit is credit in a small business’s name. It doesn’t tie to an entrepreneur’s personal credit, not even when the owner is a sole proprietor and the only employee of the small business.

Because of this, an entrepreneur’s business and individual credit scores can be very different. And establishing business credit without personal guarantee is key.

The Advantages – Especially in a Recession Downturn

Given that small business credit is distinct from personal, it helps to safeguard a business owner’s personal assets, in case of litigation or business bankruptcy.

Also, with two distinct credit scores, a business owner can get two separate cards from the same merchant. This effectively doubles purchasing power.

Another advantage is that even startups can do this. Visiting a bank for a business loan can be a formula for disappointment. But building company credit, when done properly, is a plan for success. You could even get a business loan no personal guarantee.

Individual credit scores depend upon payments but also other elements like credit usage percentages.

But for small business credit, the scores actually merely hinge on if a company pays its invoices promptly.

Recession Downturn Credit Suite

Discover our business credit and finance guide, jam-packed with new ways to finance your business without emptying your wallet. Save your money during the recession!

The Process

Growing business credit is a process, and it does not occur automatically. A small business will need to actively work to build business credit.

That being said, it can be done readily and quickly, and it is much speedier than establishing personal credit scores.

Vendors are a big component of this process.

Carrying out the steps out of order will result in repetitive rejections. Nobody can start at the top with company credit. For example, you can’t start with store or cash credit from your bank. If you do you’ll get a rejection 100% of the time.

But done right, this is how to get business credit card without personal guarantee.

Business Fundability in a Recession Downturn

A business needs to be bona fide to lending institutions and merchants.

As a result a company will need a professional-looking web site and e-mail address. And it needs to have website hosting bought from a merchant like GoDaddy.

In addition company telephone and fax numbers should have a listing on ListYourself.net.

Likewise the company phone number should be toll-free (800 exchange or similar).

A company will also need a bank account dedicated solely to it, and it must have every one of the licenses necessary for running.

Licenses

These licenses all must be in the perfect, accurate name of the business. And they need to have the same company address and telephone numbers.

So keep in mind that this means not just state licenses, but possibly also city licenses.

Working with the IRS

Visit the Internal Revenue Service website and acquire an EIN for the business. They’re free of charge. Choose a business entity such as corporation, LLC, etc.

A small business can get started as a sole proprietor. But they will probably want to change to a variety of corporation or partnership.

This is in order to decrease risk. And it will make best use of tax benefits.

A business entity will matter when it pertains to tax obligations and liability in case of litigation. A sole proprietorship means the owner is it when it comes to liability and tax obligations. Nobody else is responsible.

Beginning the Business Credit Reporting Process

Start at the D&B web site and get a free D-U-N-S number. A D-U-N-S number is how D&B gets a company into their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s web sites for the business. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process.

In this manner, Experian and Equifax will have something to report on.

Recession Downturn Credit Suite

Discover our business credit and finance guide, jam-packed with new ways to finance your business without emptying your wallet. Save your money during the recession!

Vendor Credit

First you should establish trade lines that report. This is also known as vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can begin getting retail store and cash credit.

These kinds of accounts tend to be for the things bought all the time, like shipping boxes, outdoor work wear, ink and toner, and office furniture.

But first off, what is trade credit? These trade lines are credit issuers who will give you starter credit when you have none now. Terms are usually Net 30, instead of revolving.

Therefore, if you get approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, such as within 30 days on a Net 30 account.

Details

Net 30 accounts need to be paid in full within 30 days. 60 accounts have to be paid completely within 60 days. Unlike with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used.

To launch your business credit profile properly, you need to get approval for vendor accounts that report to the business credit reporting bureaus. When that’s done, you can then use the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit – It Makes Sense

Not every vendor can help in the same way true starter credit can. These are merchants that will grant an approval with marginal effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 3 of these to move onto the next step, which is retail credit.

Uline Shipping Supplies

Uline Shipping Supplies is a true starter vendor. You can find them online at www.uline.com. They offer shipping, packing, and industrial supplies, and they report to D&B.

You have to have a D-U-N-S number. They will request 2 references and a bank reference. The first few orders might need to be paid in advance to initially get approval for Net 30 terms. Also, you may have to buy some items you don’t need.

Crown Office Supplies

Crown Office Supplies is another true starter vendor. You can find them online at https://crownofficesupplies.com. They sell a variety of office supplies and take helping clients seriously. They state, “just starting your business, or maybe have an existing business, but you have a question regarding office supplies… we are here to help!” And they report to Dun and Bradstreet, Experian, and Equifax.

There is a $99.00 yearly fee, though they do report that fee to the business credit reporting bureaus. For other purchases to report, the purchase must be at least $30.00. Terms are Net 30.

Grainger Industrial Supply

Grainger Industrial Supply is also a true starter vendor. You can find them online at www.grainger.com. They sell safety equipment, plumbing supplies, and more, and they report to D&B. You will need to have a business license, EIN, and a D-U-N-S number.

For less than a $1000 credit limit they will approve almost any person with a business license.

Accounts That Do Not Report

Non-Reporting Trade Accounts can also be helpful. While you do want trade accounts to report to at the very least one of the CRAs, a trade account which does not report can also be of some worth.

You can always ask non-reporting accounts for trade references. Additionally credit accounts of any sort ought to help you to better even out business expenditures, thereby making budgeting less complicated. These are companies like PayPal Credit, T-Mobile, and Best Buy.

Recession Downturn Credit Suite

Discover our business credit and finance guide, jam-packed with new ways to finance your business without emptying your wallet. Save your money during the recession!

Retail Credit

Once there are 3 or more vendor trade accounts reporting to at least one of the CRAs, then move to retail credit. These are companies which include Office Depot and Staples. These companies are likelier to have supplies you need.

Use the company’s EIN on these credit applications. These are no personal guarantee business credit cards!

Fleet Credit

Are there more accounts reporting? Then progress to fleet credit. These are service providers such as BP and Conoco. Use this credit to purchase, fix, and take care of vehicles. Make certain to apply using the business’s EIN. These are business credit cards without personal credit. You will have start up business credit cards without personal guarantee.

Cash Credit

Have you been responsibly handling the credit you’ve gotten up to this point? Then move to more universal cash credit. These are service providers like Visa and MasterCard. Keep your SSN off these applications; use your EIN instead. These are business credit cards for new businesses without personal guarantee.

These are frequently MasterCard credit cards. If you have more trade accounts reporting, then these are feasible. Once you’re here, these become easy business credit cards no personal guarantee.

Monitor Your Business Credit in a Recession Downturn and Beyond

Know what is happening with your credit. Make certain it is being reported and fix any errors as soon as possible. Get in the practice of taking a look at credit reports. Dig into the details, not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less.

At Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business.

Update Your Information

Update the info if there are mistakes or the relevant information is incomplete. At D&B, you can do this at: https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm. For Experian, go here: www.experian.com/small-business/business-credit-information.jsp. And for Equifax, go here: www.equifax.com/business/small-business.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to dispute any inaccuracies in your records. Errors in your credit report(s) can be fixed. But the CRAs generally want you to dispute in a particular way.

Get your small business’s PAYDEX report at: www.dnb.com/about-us/our-data.html. Get your company’s Experian report at: www.businesscreditfacts.com/pdp.aspx?pg=SearchForm. And get your Equifax business credit report at: www.equifax.com/business/credit-information.

Disputes

Disputing credit report errors generally means you send a paper letter with duplicates of any evidence of payment with it. These are documents like receipts and cancelled checks. Never send the originals. Always mail copies and keep the originals.

Fixing credit report inaccuracies also means you precisely spell out any charges you challenge. Make your dispute letter as crystal clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you sent in your dispute.

Dispute your or your small business’s Equifax report by following the directions here: www.equifax.com/small-business-faqs/#Dispute-FAQs.

You can dispute errors on your or your company’s Experian report by following the instructions here: www.experian.com/small-business/business-credit-information.jsp.

And D&B’s PAYDEX Customer Service telephone number is here: www.dandb.com/glossary/paydex.

A Word about Building Business Credit During a Recession Downturn

Always use credit smartly! Don’t borrow more than what you can pay off. Keep track of balances and deadlines for repayments. Paying in a timely manner and fully will do more to raise business credit scores than just about anything else.

Establishing business credit pays off. Great business credit scores help a company get loans. Your lending institution knows the business can pay its debts. They understand the small business is for real.

The business’s EIN connects to high scores and you can start to get new business credit cards without personal guarantee.

Business credit is an asset which can help your company for years to come. It’s the best way to get corporate credit cards without personal guarantee.

Keep Your Business Credit Cards Off Your Consumer Credit Reports in a Recession Downturn: Takeaways 

Learn more here and get started toward getting the best business credit cards for you needs . And make sure your business credit cards don’t report on your consumer credit reports. This is the best way to successfully apply for business credit card no personal guarantee.

As you keep going, you can qualify for business credit lines with no personal guarantee. And it can all start with small business credit cards without personal guarantee. The COVID-19 situation will not last forever – and in the meantime, you can be getting amazing credit cards for your business.

The post Get Business Credit Cards That Don’t Report on Your Consumer Credit Reports During a Recession Downturn appeared first on Credit Suite.

How to Rock your Business Bank Credit Score in a Recession

Rock Your Business Bank Credit Score in a Recession What’s your business bank credit score in a recession? Before going any further, do you know the difference between bank credit and business credit? Business credit is the full and complete amount of money that your small business can get from all manner of creditors. That … Continue reading How to Rock your Business Bank Credit Score in a Recession

How to Rock your Business Bank Credit Score in a Recession

Rock Your Business Bank Credit Score in a Recession

What’s your business bank credit score in a recession?

Before going any further, do you know the difference between bank credit and business credit? Business credit is the full and complete amount of money that your small business can get from all manner of creditors. That means the credit unions,  credit card companies, and leasing companies. And it means any credit your small business can get from suppliers, under what is called trade credit or vendor credit or trade lines. Your bank credit score, though, is a touch different.

Bank credit, on the other hand, is the full amount of borrowing capacity which a small business can get from the banking system only. Hence your bank credit score, of course, is the measurement of this capacity to borrow.

Your Business Bank Credit Score in a Recession, Explained

A small business can get more business credit rapidly, so long as it has at least one bank reference and an average daily account balance of at least $10,000 for the most recent three month time period. This set up will yield a bank rating of a Low-5. So this means it is an Adjusted Debt Balance of from $5,000 to $30,000.

A lower rating, like a High-4, or balance of $7,000 to $9,999 will not automatically reject the small business’s loan application. However, it will slow down the approval process.

Your Business Bank Credit Score in a Recession, Defined

A bank credit rating is the average minimum balance as maintained in a business bank account over a three month long period. Hence a $10,000 balance will rate as a Low-5, a $5,000 balance will rate as a Mid-4, and a $999 balance will rate as a High-3, etc.

Goals for Your Business Bank Credit Score in a Recession

A small business’s chief goal should always be to maintain a minimum Low-5 bank rating for at least three months. Hence that means  an average $10,000 balance.

This is because, without at least a Low-5 rating, the majority of banks will operate under the assumption that the business has little to no ability to repay a loan or a business line of credit.

One thing to keep in mind – you will never actually see this number. The bank will just keep this number in its back pocket.

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a bank loan for your business during a recession.

The Bank Credit Score Rating Ranges

The numbers work out to the following ranges:

  • High-5 – account balance of $70,000-99,999
  • Mid-5 – account balance of $40,000-69,999
  • Low-5 – balance of $10,000-39,000
  • High-4 – 7,000-9,999
  • Mid-4 – $4,000-6,999
  • Low-4 – $1,000-3,999

Do not forget, your small business needs to be at the Low-5 level bank score or better.

Rocking Your Business Bank Credit Score in a Recession

It should be clear that the thrust behind bank credit scores is to show proof that your small business can pay back its financial obligations in an expeditious manner. Therefore, yes, you will need to maintain a minimum balance for at least three months. Every cycle is based on the balance rating during the previous three month period.

Business Bank Loans in a Recession Credit SuiteCongruency

It is also vital that the business owner ensures that their business bank accounts are reported exactly the same way all of their business records are, and with the exact same physical address and phone number. And it cannot be a post office box!

It is imperative that each and every credit agency and trade credit vendor, every record keeper also lists the business name and address the exact same way. No lender is going to stop to consider all of the ways that a business might be listed, when they look into the business’s creditworthiness. Therefore, if they are unable to find what they need easily, they will just deny the application.

Note: these are record keepers of financial records, income tax, web addresses and e-mail addresses, directory assistance, etc.

Congruency also matters in the event you use a fictitious name or DBA, AKA a ‘doing business as’ status.

Responsible Account Management

Plus the business must manage its bank account responsibly. This means that the small business should avoid writing non-sufficient funds (NSF) checks at all costs, because that decimates bank ratings. Non-sufficient-funds checks are something which no business can afford to let happen. It is even a good idea for the business to add overdraft protection to their bank account as soon as possible, in order to avoid NSFs.

Positive Cash Flow

Your business must show a positive cash flow. The cash coming in and leaving a company’s bank account should reflect a positive free cash flow. A positive free cash flow is the amount of revenue left over after a company has paid all of its expenses. When an account shows a positive cash flow it indicates that the business is generating more revenue than is used to run the company. That means the bank will feel that the business can pay its bills.

Consistent Deposits

Finally, understand that banks are highly motivated to lend to a business with consistent deposits. A business owner must also make regular deposits in order to maintain a positive bank rating. The business owner must make a lot of consistent deposits. And they need to be more than the withdrawals they are making, in order to have and maintain a good bank rating. If they can do that, then they will have a good bank credit score.

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a bank loan for your business during a recession.

An Alternative to Jacking Up Your Business Bank Credit Score in a Recession

Of course we are talking about business credit building here. Business credit is an asset which can help your company in years to come.

Small business credit is credit in a small business’s name. It doesn’t tie to a business owner’s consumer credit, not even if the owner is a sole proprietor and the solitary employee of the company.

As a result, a business owner’s business and consumer credit scores can be very different.

The Benefits

Due to the fact that small business credit is distinct from consumer, it helps to protect an entrepreneur’s personal assets, in the event of a lawsuit or business insolvency.

Also, with two distinct credit scores, a business owner can get two separate cards from the same vendor. This effectively doubles buying power.

Another benefit is that even startups can do this. Heading to a bank for a business loan can be a formula for frustration. But building small business credit, when done the right way, is a plan for success.

Consumer credit scores depend on payments but also various other elements like credit use percentages.

But for small business credit, the scores truly just hinge on whether a business pays its invoices punctually.

The Process

Building business credit is a process, and it does not occur without effort. A business has to actively work to build company credit.

That being said, it can be done easily and quickly, and it is much faster than establishing consumer credit scores.

Merchants are a big component of this process.

Doing the steps out of sequence will result in repetitive denials. Nobody can start at the top with small business credit. For instance, you can’t start with retail or cash credit from your bank. If you do, you’ll get a denial 100% of the time.

Company Fundability

A small business has to be fundable to lenders and merchants.

For this reason, a small business will need a professional-looking web site and e-mail address. And it needs to have website hosting bought from a merchant such as GoDaddy.

In addition, business telephone and fax numbers must have a listing on ListYourself.net.

Additionally, the company phone number should be toll-free (800 exchange or the like).

A business will also need a bank account dedicated solely to it, and it needs to have every one of the licenses necessary for operation.

Licenses

These licenses all have to be in the perfect, correct name of the business. And they need to have the same company address and phone numbers.

So note, that this means not just state licenses, but possibly also city licenses.

Check out our professional research on bank ratings, the little-known reason why you will – or won’t – get a bank loan for your business during a recession.

Dealing with the IRS

Visit the IRS website and acquire an EIN for the business. They’re totally free. Select a business entity like corporation, LLC, etc.

A small business can get started as a sole proprietor. But they will most likely want to change to a variety of corporation or an LLC.

This is in order to minimize risk. And it will optimize tax benefits.

A business entity will matter when it pertains to taxes and liability in case of a lawsuit. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. No one else is responsible.

Sole Proprietors Take Note

If you run a company as a sole proprietor, then at least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the company name. Consequently, you can end up being directly liable for all company debts.

Additionally, per the IRS, with this arrangement there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 chance for corporations! Prevent confusion and substantially decrease the odds of an IRS audit simultaneously.

But treat any DBA filing as a steppingstone to incorporating.

Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and deal with any errors ASAP. Get in the habit of checking credit reports. Dig into the particulars, not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the CRAs.

Update Your Data

Update the information if there are inaccuracies or the info is incomplete.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to contest any inaccuracies in your records. Errors in your credit report(s) can be corrected. But the CRAs often want you to dispute in a particular way.

Disputes

Disputing credit report mistakes commonly means you mail a paper letter with copies of any proofs of payment with it. These are documents like receipts and cancelled checks. Never send the original copies. Always mail copies and keep the original copies.

Fixing credit report errors also means you precisely spell out any charges you contest. Make your dispute letter as crystal clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you sent in your dispute.

A Word about Building Business Credit

Always use credit responsibly! Never borrow more than what you can pay off. Keep track of balances and deadlines for payments. Paying off promptly and in full will do more to raise business credit scores than just about anything else.

Building company credit pays. Excellent business credit scores help a company get loans. Your lending institution knows the small business can pay its debts. They understand the company is authentic.

The company’s EIN links to high scores and your business bank credit score in a recession will not matter quite so much.

Takeaways for How to Rock Your Business Bank Credit Score in a Recession

Start with consistent deposits, even if you cannot make terribly high ones. Just, start to become dependable in how you add money to your business’s bank account. Whether you deposit every week or every other week, etc. is your own choice. Opt for whatever you are most likely to be able to do.

This can also help you with both positive cash flow and responsible account management. Hence you get a lot of bang for your buck here – quite literally.

The other fairly simple task you can undertake is to make sure your business address and other particulars are perfectly congruent across the board. This means, for example, that if you wrote Ltd. on your D&B D-U-N-S number application, but Limited when you applied for a business bank account, you will need to take measures to get these two areas in sync.

Generally, the easiest way to do this is by going through everything and simply copying and pasting your information.

The post How to Rock your Business Bank Credit Score in a Recession appeared first on Credit Suite.

How to Sound Like and Become a Business Credit Expert

What can a business credit expert help you do?  What do you need to know to sound like or even become a business credit expert?  It’s not as simple as a Google search, that’s for sure. You need someone who really knows the secrets to nailing small business funding. 

Language is Impressive but Knowledge is the True Test of Being a Business Credit Expert

Use terms like tradelines, business credit reporting agencies, starter credit, credit line hybrid, EIN and more and you will have people thinking you are a business credit expert in no time.  The problem is, unless you actually have the knowledge to back up how you sound, you can’t really help people, or yourself.  Unless you are a business credit expert, you cannot guide people through the process of building business credit and using it properly. What do you need to know?  Everything.

Business Credit Expert: What is Business Credit?

First, a business credit expert has a true understanding of what business credit is.  Just having a credit card that calls itself a business card is not business credit. Business credit is credit under a company’s EIN. It has no association with the owner’s Social Security number. It is totally separate from personal credit, and therefore the business credit score can differ drastically from your personal credit score.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

This is credit in the business’s name and it is based on the business’s ability to pay, not the business owner’s. When done right, it is possible to get some business funding based on a business credit score without a personal credit check. Also, you, the business owner, aren’t personally liable for the credit the business gets.  Business credit is essential to getting the small business funding you need. 

Business Credit Expert: How is Business Credit Different from Personal Credit? Biz Credit Expert

The obvious answer is that a business credit score is based on the business’s ability to pay, not the owner’s.  However, they are different in a number of other ways as well. Various factors affect your business credit score in ways vastly different from how they affect personal credit. Each of these factors affects business credit and personal credit in different ways. 

 

  • Late Payments

 

Most personal accounts do not report late payments to your personal credit report until they are 30 days or more past due.  Business credit accounts report to business CRAs when an account is only one day late.

 

  • Inquiries

 

When someone checks your personal credit report, there is a negative impact on your credit score.  When a lender checks your business credit score, there is no negative impact. 

 

  • Access to Business Credit Reports

 

The only ones who have access to your personal credit report are those to who you give signed authorization.  In contrast, anyone can check your business credit score.  They do not have to have authorization from you. 

 

  • Name of the Reporting Account

 

Your personal credit report has the name of the company holding each account reporting.  Your business credit report only lists the industry of the reporting account, not the company’s name. 

 

  • How long information stays on your report

 

Though it varies, most information stays on your personal credit report for the life of the report.  The average life of information on your business credit report is 3 years. 

The details may vary between CRAs, but this gives a good idea of how long certain information can affect your business credit score. 

 

  • Amounts reported

 

Exact amounts are shown on your personal credit report. Business credit reports show rounded amounts. 

 

  • Who Reports Payments to the CRAs

 

With personal credit, everyone reports your accounts and payment history. Only about 7% of those who check business credit actually report accounts to the business credit CRAs.

 

  • Debt-to-Credit Ratio

 

The amount of debt you have in relation to the amount of credit available to you makes a real impact on your personal credit score.  If your cards are near their limits, you’ll see a decrease in your score.  With business credit, being near your limits does not affect your score. 

 

  • Regulation

 

There is much less regulation when it comes to business credit, and there is virtually no regulation when it comes to correcting mistakes on your business credit. 

 

  • Monitoring

 

You can get a free copy of your personal credit report each year.  In addition, there are a number of free credit monitoring services that let you get a peek at your credit score.  These are typically updated at least once a month.  

There are business credit monitoring services.  However, they are not free.  Still, if you choose the right one, it’s worth it to know what is happening with your business credit.

Business Credit Expert: What are Business Credit Reporting Agencies?

Business credit reporting agencies are agencies that provide business credit reports.  There are several, but the main three are Dun & Bradstreet, Equifax, and Experian.  A business credit expert needs to understand what the business credit reports issued by these agencies say to lenders about businesses. Then, you can begin to understand the impact on small business lending. 

Business Credit Expert: How Do I Get Business Credit?

You can’t until your business is set up properly.  It has to be set up as a separate fundable entity aside from the owner. Until then, any accounts you have are just reporting to your personal credit, even if they are called business accounts. How do you change that?   

Contact Information

Your business has its own phone number, fax number, and address.  That doesn’t mean you have to get a separate phone line, or even a separate location.  You can even still run your business from your home or on your computer if that is what you want.  You don’t even have to have a fax machine.

 Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

EIN

You also have to get an EIN. This is an identifying number for your business that works like how your SSN works for you personally.  You can get one for free from the IRS.

Incorporation Matters

Incorporating your business as an LLC, S-corp, or corporation is vital.  It lends credibility to your business as one that is legitimate. It also offers some protection from liability. The big thing for business credit and fundability however, is that it is the only real way to separate business finances from personal finances.

Which option you choose does not matter as much for fundability as it does for your budget and needs for liability protection.  The best thing to do is talk to your attorney or a tax professional.  What is going to happen is that you are going to lose the time in business that you have.  When you incorporate, you are creating a new entity.  You basically have to start over.  You’ll also lose any positive payment history you may have accumulated. 

This is why you have to incorporate as soon as possible.  Not only is it necessary for fundability and for building business credit, but so is time in business.  The longer you have been in business the more fundable you appear to be.  That starts on the date of incorporation, regardless of when you actually started doing business. 

Business Bank Account

You have to open a separate, dedicated business bank account. First, it will help you keep track of business finances.  It will also help you keep them separate from personal finances for tax purposes. 

Furthermore, there are several types of funding you cannot get without a business bank account.  Many lenders and credit cards want to see one with a minimum average balance.  In addition, you cannot get a merchant account without a business account at a bank. That means, you cannot take credit card payments.  Studies show consumers tend to spend more when they can pay by credit card.

Licenses are a Must

For a business to be legitimate it has to have all of the necessary licenses it needs to run.  If it doesn’t, warnings are going to go up at every turn.  Do the research you need to do to make sure you have all of the licenses necessary to legitimately run your business at the federal, state, and local levels. 

Is That All? 

No, it isn’t.  The next thing you have to do is get accounts reporting.  First, get a D-U-N-S number.  You can apply for a free one on the D&B website.   Dun & Bradstreet is the largest and most widely used business credit reporting agency.  You cannot have a business credit report with them unless your business is in their system.  The D-U-N-S number is how you get in their system. 

Once you have this number, you can start to do business with companies that will report your payments to the business credit reporting agencies. You can do this in a few ways. The best bet is to try all three ways.  The more positive payment history you have, the better. 

Ask Companies You Already Work With 

Vendors you already have a relationship with may be willing to give you credit without a credit check.  Even if not, they may offer net 30 terms on invoices.  They don’t have to.  So, you will have to ask.  If they agree, ask them to report the payments to the business credit agencies. 

Ask Utility Providers 

You pay things like utilities, rent, and the internet each month anyway.  Ask those companies to report payments.

Use Starter Vendors 

This is a little-known secret of business credit experts.   Many business owners are unaware of starter vendors. Certain retailers will extend Net 30 terms in your business name without a credit check.  Then, after you pay, they will report those payments to the business credit reporting agencies.

This is how you can get started building business credit business credit.  They do not check either your business or personal credit score.  Of course, they do have other risk reducing guards in place.  They vary by vendor.   Here are a few to help you start the process. 

Crown Office Supplies

Crown Office Supplies offers paper and other office supplies. They report to all three of the major business credit reporting agencies, which of course include D & B, Experian, and Equifax. It can be hard to find vendors which report to Equifax, so getting credit with Crown is a good move.  They do have a $99 annual membership fee.

Uline

Uline sells shipping, packing, and industrial supplies.  Also, they report to Dun & Bradstreet and Experian.  This means you must have a D-U-N-S number. 

In addition, they ask for 2 references and a bank reference. The first few orders might need to be paid in advance to get approval for Net 30 terms.

Grainger Industrial Supply 

Grainger sells power tools, pumps, hardware and other things. In addition, they can handle maintenance of your auto fleet. You need a business license and EIN to quality, as well as a D-U-N-S number.

You can apply by fax or over the phone. If you need less than $1,000 in credit, you only need a business license for approval. For over $1,000, you will need trade and bank references.  

If you are just starting out and do not have references, the $1,000 is plenty to get you started building your business credit. 

Why You Really Need an Actual Business Credit Expert

Knowledge is definitely what makes you a business credit expert.  The best way to become one, and get that knowledge, is to work with an actual business credit expert.  They know things that are not widely made known to the public.  These are things that a simple Google search will not tell you.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

For example, you need a lot of accounts reporting business credit.  You need several of these starter vendor accounts, but it is not easy to find vendors that will work like this.  Most vendors do not make it known if they report payments to the business credit reporting agencies, or not.  You need expert help to help you find the ones that you qualify with and that will report. 

Vendor accounts change their underwriting and reporting practices regularly.  It is incredibly difficult to keep up with.  It takes alot of time and a lot of effort. An expert has the time and knowledge it takes to stay on top of which vendors are approving accounts, and what they look for.  Also, they can keep tabs on who reports accounts and who they report them to.

In addition, it is usually a shot in the dark as to why you were denied business credit.  A business credit expert has the knowledge and expertise to help you set yourself and your business up to give you the best chance possible. They know what creditors are looking for, and what gets you denied.  It’s likely many of the reasons businesses are denied credit will shock you. 

It is not easy to keep up with the ever changing world of business credit.  With a business credit expert, you won’t have to guess. 

The post How to Sound Like and Become a Business Credit Expert appeared first on Credit Suite.

How to Fund a Startup Business No Matter What

What do you need to know about how to fund a startup business? First, there is more than one way to do it!  It’s true. Regardless of what is happening around you, in most cases you can fund a startup business in some way.  It may very well take longer depending on your exact situation, but it is almost always possible. 

You Can Fund a Startup Business No Matter What is Going On

Fund a Startup Biz Credit SuiteThe thing is, virtually everyone assumes if they cannot get a business loan, they can’t fund a startup business.  That really isn’t true. There are all kinds of options for funding. Loans are only one of them. Furthermore, there are probably many more types of loans than you think. We put together a list of some of the most common, and less common, ways to fund a startup business in any situation. 

Fund a Startup Business: Traditional Loans

These are the loans that you go to the bank to get.  With a traditional loan, you are almost always going to have to give a personal guarantee.  This means they will check your personal credit.  If it’s not great, you are probably out of luck. That is where a lot of people stop, thinking they have hit a brick wall.

There are ways over that wall however.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

Fund a Startup Business: SBA Loans

SBA loans are traditional bank loans.  However, they have a guarantee from the federal government. The Small Business Administration works with lenders to offer small businesses funding solutions that they may not be able to get based on their own credit history. Because of the government guarantee, lenders are able to be a little less strict on personal credit score requirements. 

The trade-off is that the application progress is lengthy. There is a ton of paperwork connected with SBA loans. 

Fund a Startup Business: Private Loans

Private business loans come from companies other than banks.  These companies are sometimes called alternative lenders.  Many have popped up in the past decade as entrepreneurship has become more common.  The need for a financing option from somewhere other than traditional banks has spurred this growth. 

There are a few benefits to using private business loans over traditional loans.  The first is that they often have more flexible credit score minimums.  They still rely on your personal credit. Yet, they will often accept a score much lower than what traditional lenders require. Another benefit is that they will sometimes report to the business credit reporting agencies.  That helps build or improve business credit. 

The tradeoff is that private business loans typically have higher interest rates and less favorable terms.  Still, the ability to get funding and the potential increase in business credit score can make it well worth the cost. 

Examples of Private Lenders

The thing about private lenders is, you almost always have a time in business requirement. However, it can be as low as one year, even 6 months in some cases.  

BlueVine

The minimum loan amount available from BlueVine is $5,000 and the maximum is $100,000. Annual revenue must be $120,000 or more and the borrower must be in business for at least 6 months. Personal credit score has to be at least 600. It is also important to know that BlueVine does not offer a line of credit in all states. 

OnDeck

With OnDeck, applying for financing is quick and easy. Apply online, and you will receive your decision once application processing is complete. Loan funds will go directly to your bank account. The minimum loan amount is $5,000 and the maximum is $500,000.

There is a personal credit score requirement of 600 or more.  Also, you must be in business for at least one year. There is an annual revenue requirement of at least $100,000 as well. In addition, there can be no bankruptcy on file in the past 2 years and no unresolved liens or judgements. 

Fund a Startup Business: Crowdfunding

Crowdfunding sites allow you to pitch your business to thousands of micro investors. Anyone who wants a piece of the action can buy in. 

Investors pledge amounts ranging from as low as $5 to as high as they want. They may give $5, $80, $150, or even over $500. As a general rule, they can give as much or as little as they want.

Though not always necessary, most business owners offer rewards for investment. Typically, this comes in the form of the product the business will be selling. Different levels of giving result in different rewards. For example, a $50 gift may get you product A, while a $100 gift will get you an upgraded version of product A.

The two most common crowdfunding platforms are Indiegogo and Kickstarter. 

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

Fund a Startup Business: Angel Investors

These investors are usually only in for a one-time deal. Many choose to spread their risk out over many people and many businesses to be certain they get a safe return on their investment.

Angels tend to be a lot more informal than most types of funding. They can be people you know. Or they can be people you connect with through networking or other means. 

Angels are not covered by the Securities Exchange Commission’s (SEC) standards for accredited investors. But a lot of them are accredited investors anyway. 

To become an accredited investor, an person has to have a minimal net worth of $1 million, and an annual income of $200,000.

There are a number of angels who aren’t millionaires. They could be friends or colleagues with home equity, or local professionals who are looking to invest. 

How Do You Find Angel Investors?

The best way to find these kinds of investors is to ask. You can also try an angel investors website or network. Try Gust, which used to be called Angel Soft. They keep a database of investors, companies, and programs. Startups can also search for business plan competitions and more.

Another option is to look at the biggest angel investor groups. Be aware, however, that these meetings are really only going to happen if you can get an introduction. 

According to Entrepreneur, in order from smallest to largest the top 10 Angel Investor groups are:

  1. New York Angels Inc.
  2. Alliance of Angels (Seattle)
  3. Pasadena Angels
  4. Hyde Park Angel Network (Chicago)
  5. Band of Angels (Menlo Park, CA)
  6. North Coast Angel Fund (Cleveland)
  7. Golden Seeds LLC (NYC)
  8. Investors’ Circle (San Francisco)
  9. Tech Coast Angels (Los Angeles) and
  10. Ohio Tech Angel Funds (Columbus, OH)

Focus and requirements may vary from group to group.  For example, some concentrate on local startups only. Do your research so you don’t waste yours and the angels’ time if it isn’t a good fit.

Fund a Startup Business While Keeping Your Day Job

Here’s an option that most don’t want to hear, but it is totally legitimate and sometimes, it’s just the best way.  If you do not have access to a ton of funds to launch a huge new business right away, consider keeping your day job and start your business small, as a side hustle. 

Not every business can start this way, but a lot can.  For example, a bakery or a cleaning business can easily start this way.  If you set up from the beginning to be fundable and build business credit, you can go even further.  More on that later. 

Fund a Startup Business: The Retirement Years

This is similar to keeping your day job in that you start small.  If you have retirement savings you could use that as loan security, or take a loan directly from retirement if your plan allows for that.  You can build your business slowly, a little at the time. While you’re doing so, you can work to build business credit and overall fundability 

Whatever You Do, Build Fundability from the Beginning

So, how do you do that?  How do you build fundability and business credit? The first thing you do is set up your business to be fundable.  When you do this, you will also be setting it up to be a separate entity from you as the owner, which is the first step in building separate business credit.  How do you build a fundable foundation? You need the following.

Contact Information Separate from the Owner

The first step in setting up a foundation of fundability is to ensure your business has its own phone number, fax number, and address.   That doesn’t mean you have to get a separate phone line, or even a separate location.  You can still run your business from your home or on your computer if that is what you want.  You don’t even have to have a fax machine.  

An EIN

The next thing you need to do is get an EIN for your business.  This is an identifying number for your business that works in a way similar to how your SSN works for you personally.  

Incorporate

You have to incorporate as an LLC, S-corp, or corporation. It gives credit to your business as one that is legitimate, and it separates your business from you as the owner.

Which option you choose does not matter as much for fundability as it does for your specific budget and liability protection need.  The best thing to do is discuss it with your attorney or a tax professional.  You are going to lose the time in business that you have.  When you incorporate, you become a new entity. Basically, you have to start over. You’ll also lose any positive payment history you may have.

This is why you have to incorporate as soon as possible.  Not only is it vital to fundability and for building business credit, but time in business is also important.  The longer you have been in business the more fundable you appear to be.  That starts on the date of incorporation, regardless of when you actually started doing business. 

Separate Business Bank Account

You have to open a separate, dedicated business bank account.  There are a few reasons for this.  First, it will help you keep track of business finances.  It will also help you keep them separate from personal finances for tax purposes. 

In addition, you cannot get a merchant account without a business account at a bank. That means, you cannot take credit card payments.  Studies show consumers tend to spend more when they can pay by credit card.

Licenses

For a business to be legitimate it has to have all of the necessary licenses it needs to run.  If it doesn’t, red flags are going to fly up all over the place.  Do the research you need to do to ensure you have all of the licenses necessary to legitimately run your business at the federal, state, and local levels. 

Website

These days, you do not exist if you do not have a website.  However, a poorly put together website can be even worse.  It’s the first impression you make on most, and if it appears to be unprofessional it will not bode well for you with lenders or customers. 

Fund a Startup: Build Business Credit 

Okay so, you need to know how to fund a startup, not how to set it up, right?  Here’s the thing. Once you have your business set up like this, you can start building business credit so that you have more options for funding your business.  

The main key to this is to use starter vendors that will issue net terms on your invoices and report those payments to the business credit reporting agencies.  Even if you are keeping your day job or starting small during retirement, you can use these vendors for the things you need in the everyday course of business. 

Things like office supplies, packaging, and even cleaning supplies can be purchased from such vendors on account using your business information.  As you get enough of these accounts reporting, you can apply for store credit, then fleet credit, and eventually, regular business credit cards that are not limited to specific types of purchases or specific stores.  Then, your business credit should be strong enough that you can qualify for a loan and launch your business on a bigger scale.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

Fund a Startup Business: There are More Ways than One

The truth is, there is more than one way to fund a startup business.  Depending on your specific situation, you will have to decide which option or combination of options will work best for you and your business.

The post How to Fund a Startup Business No Matter What appeared first on Credit Suite.

How to Create an E-Commerce Business Plan

If you ever plan on finding investors, partners, or employees for your e-commerce startup, you’ll need to know how to create a business plan. A lot of people make this process out to be more complicated than it needs to be. When you do it right, creating a business plan doesn’t have to be so difficult.

In this guide, I’m breaking down step-by-step everything you need to know about creating a powerful e-commerce business plan.

What is an E-Commerce Business Plan?

Have you ever thought about something you wanted to accomplish in your business? You’d likely jot down a few lines discussing strategies, costs, and methods behind the steps you would take to achieve those goals.

If you’ve ever done that, you’ve created a basic business plan, and there isn’t too much more to it than that. An e-commerce business plan is a strategy for how your business will work, how you’ll fund it, who your audience will be, and how you plan to succeed.

Understanding how to create a business plan is key. It requires research, understanding your audience, budgeting, and more.

The overall key to writing a business plan is to create something comprehensive enough, so you never have to wonder what step is coming next. As you navigate the sometimes challenging process of starting an e-commerce business, don’t leave anything to chance.

When you’re struggling or having a hard time envisioning the next step, you don’t have to worry because your business plan thoroughly outlines everything you’re going to do, when you’ll do it, and how much it’ll cost.

Another aspect of business plan writing is looking for investors or partners. You need to pitch your e-commerce business in a way that is easy to understand. Investors aren’t going to jump aboard something that lacks vision or appears unorganized.

Having a thorough business plan that gets straight to the point will show investors that you know what you’re doing and you have a concrete strategy for success.

How is an E-Commerce Business Plan Different From Other Kinds?

The way e-commerce businesses reach their customers is much different. At a brick and mortar store, for example, foot or vehicle traffic will contribute to a lot of free advertising for the business.

E-commerce stores, on the other hand, can very easily get buried in the SERPs, never to be seen by anyone if you don’t know how to get the word out. You need to keep these types of things in mind when putting together your business plan.

As for research and development of your business plan, standard businesses need to factor in local licenses, ordinances, building codes, and other factors that may influence where and how they can conduct business.

Luckily, e-commerce doesn’t have to worry as much about that, but it doesn’t mean you can ignore it either. It’s your responsibility to understand any restrictions or requirements that may prevent you from sourcing and selling your products.

Why E-Commerce Business Plans Are Important

Understanding how to create a business plan means nothing if you can’t see the importance behind it. While I believe there are more important aspects of starting a successful business, every e-commerce venture should have a stable foundation, beginning with a business plan.

Business Plan = GPS

You’re the driver of this business, but you’ll end up going in circles, wasting time and money, if you don’t know where you’re going. Having a solid business plan guides you through the steps of starting and growing a business. Think of the plan as the GPS of your business. If you ever get lost, you can fall back on your original plan.

It Helps You Generate Ideas

This process is much easier than it seems. It might seem like this looming dark cloud of horror, but once you dive in, the juices will start flowing, and you’ll find out that you probably have a lot of great ideas. This may be the first project of your new venture, so business plan templates and how-to guides can help.

It Can Help You Understand the Market

Getting your audience right is the most important aspect of an e-commerce business. If you’re trying to reach everyone, you’ll reach no one. A big part of your business plan needs to be the development of a customer avatar. This avatar is your perfect customer. They’re the ones that buy everything you sell because they love you and your brand.

It Helps with Funding

Whether you’re looking for funding or business partners, you’ll need a business plan. Having a strong strategy shows investors that you’re confident in what you’re doing, you understand the business, and investing with you is a smart choice for them.

It’s a Great Way to Keep Track of Accomplishments

What better way to look back and see everything you’ve dreamed of come to life? You can map out the next few years in a business plan and look back as everything comes together, and keep track of everything you’ve accomplished. A business plan acts as a “to-do” list for your new venture.

What Does an E-Commerce Business Plan Look Like?

If you’re wondering what a business plan should include, it might look a little different than you originally thought. The days of massive 15-page business plans are over; you don’t need a super complicated plan to find investors and sell your products.

Lean business plans are growing in popularity. This e-commerce business plan involves a one-page “pitch” of your business. You’ll document the problem you’re solving, your unique solution, your market, the competition, your team, and a little information about your company culture.

Part 1: Executive Summary

how to write a business plan executive summary

Think of an Executive Summary as an overview of your company’s goals and objectives. If you had to hand someone a piece of paper explaining as much about your business in 250 words or less, what would you say?

It should include information such as:

  • A description of your products and what you sell
  • Your goals as an e-commerce provider
  • Identifying your target audience
  • Explanation of your competition and how you stack up
  • Overall growth potential
  • Funding requirements

While you’re not going in-depth in any one area here, this is the most important aspect of the business plan because it’s your overview. When people think of your e-commerce brand, this is what they’ll think.

Part 2: Description of the Company

Who are you, what is your experience, and why should you have the right to sell products to other people?

The company’s description is a lot less about what you want it to “be like” and more of what “you’re like.” You’re pitching yourself, your experience, and your ability here.

A great business example here might be:

how to write a business plan description

In this description, we covered what we’re selling and provide the credentials of the owner, which will create confidence in potential investors and partners.

Step 3: Market and Industry Research

If you don’t understand your audience or the industry you’re working in, you’re doomed. Researching the market is critical, and there’s a big difference between standard business and e-commerce here.

When you’re researching the market for a retail store, you’re very limited in who your audience is, so it’s a bit more cut and dry.

As for e-commerce, the world is your audience, but you need to narrow it down to a specific demographic to cater to your products and marketing to those people.

Ask questions like:

  • What problems do my customers have?
  • How can I solve these problems?
  • What products solve those problems?
  • When do people shop for these products?
  • How often do they purchase them?

Step 4: Operations Plans

Forget learning how to create a business plan; we all go into business to profit, right? Having an operations plan helps ensure you remain profitable by keeping all your costs in line. This section of the business plan discusses managing, staffing, preparing products, fulfilling orders, inventory management, customer service, and more.

This part is where you get to start outlining what a typical day will look like in your business. How will it run, how will people convert, and how will you fulfill those orders?

Start thinking about things such as:

  • What equipment and supplies do I need?
  • What is the chain of command; who is in charge?
  • Do I need to develop products, or am I reselling others?
  • What are my staffing needs?
  • Will my operations change or remain the same as I grow?

Make sure you keep your industry, market, and target audience in mind as you prepare your operations plan. You don’t want to venture off in the wrong direction as you dive deeper into it.

Step 5: Marketing Plans

It’s a no-brainer that you’ll have to market your business if you want to have success, but you need a plan. In e-commerce, you have a few different options, and the choices you make will determine a lot.

You need to highlight the methods you plan on using so partners and investors can see that you have a clear path to success. Some of your choices may be:

  • PPC (Pay-Per-Click)
  • SEO/Content Marketing
  • Guest Posting
  • Social Media

I recommend using a combination of all of these because they each have upsides and downsides. For example, SEO is a relatively low cost to get started, but it takes time, and if you don’t possess the knowledge yourself, you’ll have to hire an agency to do it for you.

PPC can be costly if you don’t know what you’re doing, but the results can come quickly because you’re leapfrogging over a lot of the competition.

Regardless of what marketing methods you choose for your e-commerce business plan, you need to highlight them and explain how you plan to use them.

Step 6: Costs and Revenue Predictions

Now you need to wrap up your business plan and put a nice bow on top. Based on everything you’ve included so far in your business plan, what are your costs versus your revenue? Keep in mind that first-year revenues aren’t always extravagant, but you need the potential to gain more revenue in the future.

As long as investors and partners see that you have the growth potential, they won’t worry too much about first-year losses. The goal should be to keep your costs as low as possible and your revenue as high as possible (makes sense, right?).

Predict the total cost of operation in your business in the first year or two and include that in the plan. Then, anticipate the revenue prediction as well and include that.

If you’ve followed everything in this guide, there should be a clear path that brings you to those numbers. You should know how much everything will cost to get started and operate the business for a year.

Based on your market and what your competition is doing, that’s where you get your first-year revenue predictions.

Make it transparent and keep it simple.

What Do I Do With an E-Commerce Business Plan?

Now that you know how to create a business plan, what are your next steps? What do you plan to do with the business plan? Most people will use their business plan to find investors, partners, and employees when they’re getting started.

If you’re thinking about pitching to investors, you’ll want to choose carefully because not all investors are the right choice for you. Even if someone is willing to give you what you ask, they might not be the right fit, and taking their money will lead you down the wrong path.

First, you want to look at an investor’s expertise. When they have experience in a certain area, it makes it easier for them to understand your potential, and they can offer guidance to help you succeed.

Second, in what stage is your business? Different investors specialize in different stages. Some invest in pre-seed, while others won’t even hear your pitch until you have revenue.

Third, how much do you think you need? What you think you need and what you need are two different things.

Lastly, how do you plan on involving your investors? Some investors will back you financially and offer nothing more, while others will demand consistent financial updates and reports while offering guidance and assistance. You need to determine how involved you want your investor to be in your operations.

Conclusion

Now that you know how to create a business plan, the rest is up to you. Remember that gathering information and understanding something is important, but it’s nothing if you don’t implement what you learn. Take the steps outlined in this guide and put them to work.

If this seems a little daunting, we have plenty of resources to help you. Your business plan doesn’t need to be this elaborate essay; you can complete it in a day with the right strategy.

What do you think is the most important part of creating a solid business plan?

The post How to Create an E-Commerce Business Plan appeared first on Neil Patel.