21 Aug 2018, 15:30 — 4 min read
Summary: Business mentor Dhananjay Parkhe shares how entrepreneurs are prone to make financial mistakes when financing the launch, operation and/or growth of their businesses. He discusses the importance of business credit to minimise this risk.
As an entrepreneur, you are hardwired to enjoy a greater level of risk than the average person. But do you enjoy the thrill of business and investing so much that you’re willing to risk:
- Being hounded by creditors?
- Declaring bankruptcy?
- Being denied a mortgage?
- Paying more than your fair share of interest on your loans?
- Losing your house?
If you answered ‘no’ to one or more of these questions, read further on how you can minimise financial risk as a business owner.
If you are like most entrepreneurs, investors, and business owners I have met over the past 44 years, you may be in danger of facing all of these horrific problems.
And it is all because of your business.
You see, entrepreneurs typically make one or more financially devastating mistakes when financing the launch, operation and/or growth of their businesses. In most cases, they don’t realise that they’re making a mistake.
And to tell the truth, even when they do realise they’re making a mistake, they lull themselves into thinking that the consequences will be a minor annoyance. Until, one day, they can’t qualify for a mortgage. Or they can’t get the to-die-for financing offered on the new car they are buying. Or they are hounded by creditors and eventually have to declare bankruptcy.
And it is all because they use their personal finances to fund the launch or expansion of their business. They then use personal credit cards to pay for business expenses. If you are in business or thinking about starting a business, business credit is a must.
Let me explain. Most business owners have no idea that they can establish business credit and even fewer know how to how to establish business credit. If business owners would take the time necessary to educate themselves about establishing credit they would no longer have to use their personal funds for startup capital or working capital.
They would also be able to use business credit cards which don’t report to their personal credit reports, therefore, not lowering the personal credit scores.
The most important goal of business credit is to obtain unsecured business lines of credit, which can be done once the business credit profile is set up properly. Once a business obtains unsecured business lines of credit, they have the working capital they need to start a business or expand their business. The business owner has check book control to use the business lines of credit as they wish. And best of all, the business lines of credit does not report to the business owner’s personal credit report.
If you have set up your business profile correctly there are a number of banks that will lend to brand new startup businesses. That is right, brand new start up businesses with no track record whatsoever. The banks will extend unsecured business lines of credit so they can have the startup capital they need to finance the business of their dreams.
Make no mistake about it; business credit is a must for every business owner. Don’t put your personal assets at risk to finance or fund your business.
To explore business opportunities, link with me by clicking on the 'Invite' button on my eBiz Card.
Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.
Posted byDhananjay Jay Parkhe
Dhananjay (Jay) Parkhe Global Goodwill Ambassador. Mentor Author Speaker Coach CSR, Advisor, Educator, Independent Director Bengaluru Area, India
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