Credit plays an important role in your personal and business life. It impacts your purchasing power, the interest rates you'll pay, and the terms of repayment. The more insight you have about credit, the easier it is to succeed in business.
Successful business owners appear to have a firm and knowledgeable grasp regarding finance and credit. Others, however, become credit savvy through years of experience and trial and error. Regardless of a business owner's background, becoming more credit savvy is possible by adopting certain qualities and personality traits.
Here are some of those key character traits of credit-savvy business owners.
They are upfront and on the level - Being straightforward and honest with yourself about your personal and company finances enables you to pinpoint past mistakes and deal with budget issues or bad spending habits. It's key to identify your company's financial needs and identify the most appropriate sources of financing based on your honest financial assessment.
They are forward thinking –The time period when a business needs money the most is when it's hardest to obtain: during the startup phase. Planning ahead, being clear on how much you need, and researching what lenders look for is essential to securing the funding your company needs. For starters, obtain a credit report on yourself and your business well in advance of searching for funding.
They are detail oriented – Credit savvy business owners know the details of their financial status, from their personal credit ratings to the most recent profit and loss statement of the business. The fact is that numbers tell the real story of a business. Other factors that impact your bottom line are your fixed and variable expenses. Pay close attention to details like this so you can determine the health of your business and make appropriate adjustments if necessary.
They are disciplined – Business owners who are knowledgeable about credit and finance have a great deal of self-control. They conserve cash flow, follow budgets, use and manage credit responsibly, and keep their credit utilization ratio at or below 30%. According to the Corporation for Enterprise Development (CFED) which surveyed 930 small business owners; discovered that the ability to manage a company's cash flow effectively was their secret to small business success.
They know their priorities – Savvy business owners put their priorities in check and know what areas of their personal and/or business credit demands their attention. They pay their invoices on time and keep debt at a manageable level. They learn from their past mistakes and recognize them as learning opportunities.
They educate themselves – Business owners well versed in credit and finance invest in their ongoing education. They learn, study and research personal and business finance, including information about funding programs, credit products, and credit scores. It's difficult to make wise decisions about credit without a clear understanding of all the factors involved in the decision making process.
If it's true that you can become a credit savvy business owner by emulating one, this article gives you the roadmap for success. Whether it's gaining more knowledge about credit, knowing your numbers, or planning ahead, there's a lot to be learned from credit savvy business owners. Take a close look at your personal and business finances to determine what steps you can take to improve. It may be just what you need to take your personal and business finances to the next level.
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