Tag: history

Performance Measurement– A Short History

Efficiency Measurement– A Short History

The year 1970 saw the magazine of 2 publications, Kuznets’ “Economic Growth of Nations” as well as Solow’s Economic Growth” in 1971. Unknowingly, it noted the beginning of an uncommon specialist agreement on financial development.

In his publication, Kuznets summarized his years of empirical research study. Solow’s job at the same time included his very own recap of his years of academic study.

Solow’s concept, Kuznets empirical research studies

For the financial experts, Solow’s neo-classical concept of financial development, specifically his evaluation of constant states with consistent prices of development, given theoretical clearness and also refinement.

Kuznets, for his component, measured the lengthy move of historic experience of the United States as well as 13 various other created economic climates. He incorporated this with measurable contrasts amongst created and also establishing economic situations throughout the postwar duration.

Very same subject

Without understanding of each various other’s job, both writers functioned individually on their publications with no link from each other. Proof of this was the complete lack of cross-references in between their jobs. Oddly, they were servicing the very same subject, within the exact same structure, and also within the very same area at Cambridge, Massachusetts.

After being tested by Denison, Kuznets identified Denison’s strategy to gauging labor input as well as offered his very own variation in 1971.

Solow, on the various other hand, made considerable recommendations to Denison’s searchings for on the development of outcome as well as resources supply. He stuck to hrs functioned (or ‘man-hours’ as it was called in the 70s) as a step of labor input.

Kuznets revealed that “… the payment of the element inputs per head was a small portion of the development price of per head item’. According to his price quotes, the payment of rises in funding input per head over this considerable duration was adverse.

Pertinent to these, Tinberger in 1942 assessed the resources of U.S. financial development a century earlier. He located that effectiveness made up just a bit much more that a quarter of development in outcome, while development in resources and also labor inputs represented the rest.
This was specifically the reverse of the final thought that Kuznets (1971) and also Solow (1970) got to 30 years later on.

Overall aspect performance

The ‘overall variable efficiency’ (or effectiveness) was presented individually by Stigler as well as came to be the beginning factor for a significant research study program at the National Bureau of Economic Research.

This program utilized information on outcome of the U.S. economic situation from earlier researches done by the bureau consisting of the introducing price quotes of the nationwide item by Kuznets.

A lot of the information was produced by Kendrick that made use of a specific system of nationwide manufacturing accounts. These consist of steps of outcome, input and also efficiency for specific sectors and also nationwide accumulations.

In Solow’s short article “Technical Change as well as the Aggregate Production Function” he recognized “technological adjustment” with changes in the manufacturing feature. Like Abramovitz, Kendrick, as well as Kuznets, Solow associated mostly all of U.S. financial development to the “recurring” development in performance.

Kuznets later on enhanced the searchings for of Abramovitz, Kendrick and also Solow. It proclaimed that financial development was greatly attributable to the Solow recurring (performance) in between the development of result as well as the development of resources and also labor inputs.

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4 Reasons Your Business Needs a Card to Build Small Business Credit History

What is Small Business Credit History and Why Do You Need It?

In the excitement of starting a business, and then the ensuing chaos of running a business, many business owners do not consider that they need to actively build small business credit history.  It is likely in fact, that if they stopped a minute to think about it, they would find that they imagine it is building on its own in the daily course of things.  After all, you do not have to do anything to establish a personal credit history.  You simply get credit, make payments (or not), and your personal credit history builds as a function of the financial choices you make.

This is not how it works with business credit.  In fact, unless you make some very active, purposeful choices, it is possible to own and run a business for years and never build business credit. It’s unfortunate as this can be a tragic mistake for your business.  The problem is, most business owners do not even realize it is something they need to be doing.  They do not know that to build small business credit history, they have to actively work toward it.  If they do know, they do not understand how important it is.

We are going to answer both questions.  First, why is it important? Next, how on earth do you do it?

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4 Reasons Why You Need to Build Small Business Credit History

While it isn’t hard to imagine why credit history itself is important, it can be difficult to grasp why a business needs to build small business credit history separate from that of its owner.  Here are just four reasons why.

Protect Your Personal Finances

The greatest benefit to the business owner is that when a business has a credit history of its own, the owner’s personal finances are better protected.  You might think that if business debt is in the business name, you as the owner are not liable for it.  That is not the case, unless you follow some very specific steps.

The truth is, some lenders will hold you liable anyway.  There are a number of lenders however, especially credit card companies, that will extend debt to the  business alone if it is set up as a funable entity.  In these cases, the owner’s credit will not change in relation to what happens with that debt.  The account will only show up on the business credit report.

Allow for Better Rates and Terms

As I said before, some check personal credit no matter what.  However, if you do not have great personal credit, but your business credit is good, you may be able to negotiate for better terms and rates despite a lower personal credit score.  It will not protect your personal credit completely, but it can still do you some good.

build small business credit history Credit Suite2

Increased Borrowing Capacity

Businesses have a greater credit capacity than individuals for a number of reasons.  The main reason is the increased income from business activities.  This is important, as the credit needs of a business are significantly higher than those of individuals.

Trying to finance a business on personal credit capacity is dangerous.  Business spending is much higher than personal spending by nature, and personal credit limits are much lower than business credit limits.  Often, personal credit can’t hold up to business spending.  If it can, then balances hover at or near credit limits, causing a high debt-to-credit ratio and thus a lower personal credit score even if you make payments on time.

Increase the Value of Your Company

Even if you are not thinking of selling your company, ever, you never know what can happen.  If you build your  business credit score now, it will go with your company even if the business changes owners.  Anyone who buys your company will also get its credit history and benefit from the hard work you put into building it.

 Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

How Do You Build Small Business Credit History?

Now that you understand why you need to do it, you need to know how to build  business credit.  It takes time.  It’s a process.  The first step is to separate your business from yourself.  This will ensure your business accounts are reporting to your business credit history and not your personal credit history.

Business credit is credit in a business’s name. It doesn’t link to a business owner’s individual credit, not even when the owner is a sole proprietor and the only employee of the company.

Build Small Business Credit History: Incorporate Your Business

The best place to start is at the beginning.  However, if you are already up and running, it’s never too late.  The first thing you must do is formally incorporate your business.  This means organizing as a corporation, S-corp, or LLC.

The option you choose will depend on a number of variables specific to you and your business.  The two main questions to ask yourself are:

  • How much personal liability protection do you want or need?
  • How much do you want to spend to incorporate?

Each option offers different levels of protection and expense, so it just depends on which one works best for you and your business.  They each offer the separation you need to build small business credit history.

Build Small Business Credit History: Separate Contact Information

Your business absolutely must have an address, phone number, and email address that is different from yours as the owner. The phone number should be through a toll-free exchange and listed in the 411 directories.  Do that here. Your email address cannot be from a free service.  That will not work. You need to have an email address that has the same URL as the business website.

Speaking of websites, yes, you need one for your business.  Not only that, but it needs to be a good one.  If it looks sloppy or unprofessional, it could do more harm that good.  Hire a professional to ensure it is done properly, and spring for paid hosting with someone like GoDaddy.  Free hosting does not look professional.

Build Small Business Credit History:  Separate Bank Account

Your business needs a business bank account.  Running business income and expenses through your personal accounts can cause a host of problems.  Tax time can be especially daunting when you have to separate business expenses from personal ones.  Beyond that however, many vendors and credit card companies require a business bank account before they will extend business credit.

Build Small Business Credit History: Identifying Numbers

There are two identifying numbers that your business will need to build business credit history.  The first is an EIN.  This is an identifying number for your business similar to how social security numbers function for individuals.   Get it for free on the IRS website.

Next, your business needs a D-U-N-S number.  This one comes from Dun & Bradstreet.  It is free as well, but they will try to sell you a ton of other services while you on their site.  You do not need anything else.  Just get the free number.

Without this number you cannot have a credit file with Dun & Bradstreet.  Since they are the largest and most commonly used business credit reporting agency, you definitely need to have the number.

Build Small Business Credit History: Get Accounts Reporting

The next obstacle to overcome is how to get accounts reporting.  This one seems hard on the front end, but truly it isn’t once you know the secret.  That secret is the vendor credit tier.

Vendor Credit Tier

First you must build tradelines that report. This is also called the vendor credit tier. 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 start to acquire credit in the retail and cash credit tiers.

These vendors sell the things you already buy all the time, like marketing materials, shipping boxes, outdoor workwear, ink and toner, and office furniture. Many of them will extend net terms on invoices without a credit check, and then report those payments to the business credit reporting agencies.

These are merchants that grant an approval with very little effort. You want 5 to 8 of these to move onto the next step, which is the retail credit tier. But you may have to apply more than one time to these vendors. This is to prove you are responsible and pay on time. Here are some of the most commonly known and easiest  vendors to get started with  in the vendor credit tier.  They are known as starter vendors.

Uline

This is a true starter vendor that sells shipping, packing, and industrial supplies.  You have to have a D-U-N-S number. So Uline will ask for 2 references and a bank reference. The initial few orders may have to be prepaid to first get approval for Net 30 terms.

Quill

This is another starter vendor. They sell office, packaging, and cleaning supplies.  So they also report to D&B and Experian.

Since Quill reports to two separate credit reporting agencies, you get two credit experiences with them. Place an initial order first unless the D&B score is developed.  In most cases they put you on a 90-day prepayment schedule. If you order items monthly for 3 months, they usually approve you for a Net 30 Account.

Grainger Industrial Supply

Grainger sells safety equipment, plumbing supplies, and tools.  They report to D&B, and you need a business license, EIN, and a D-U-N-S number.

For less than a $1000 credit limit they approve almost anyone with a business license.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the business credit agencies, then move onto the retail credit tier. These are credit cards connected to specific businesses like Office Depot and Lowes.

Fleet Credit Tier

After the retail credit tier comes the fleet credit tier. These are businesses such as BP and Conoco. Use this credit to buy fuel, as well as to fix and maintain vehicles.

 Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Cash Credit Tier

After the fleet credit tier comes the cash credit tier.  These are service providers like Visa and MasterCard that are not attached to a specific store.

The thing about trade accounts in the vendor credit tier and the credit cards in the retail, fleet, and cash credit tiers is that they report to the business credit reporting agencies (CRAs).  Not all lenders will do that.  You definitely need to work through the tiers with the credit card companies if you are going to build small business credit history.  This is the only way to do it.

Keep an Eye on Your Credit History

You’ll want to watch both your business credit reports and your personal reports to make sure accounts are reporting on the right one.  While you are at it, keep an eye out for mistakes, and keep information updated.

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

Your Business Needs a Card to Build Small Business Credit History

Now you understand what business credit is and why you need it.  Why though, do you need a credit card to build small business credit history?  Here’s why.  First, it will build faster with a credit card.  Building business credit with vendor accounts only would be extremely slow.

Term loans rarely help build business credit as most lenders do not report to business credit agencies.  They typically only pay attention to the owner’s personal credit, though they may take business credit into account if it can help secure the loan.

Some alternative lenders will report to the business credit agencies, but they will not extend credit unless you already have a solid business credit score.  That makes it hard to use them to build business credit.  The key to being able to build business credit history lies with the vendor credit tier and business credit cards.

The post 4 Reasons Your Business Needs a Card to Build Small Business Credit History appeared first on Credit Suite.

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