Business Education

Do Businesses Really have a Credit Score?

Do businesses actually have a credit score? The short answer is — yes. And, these measures of financial responsibility are calculated much in the same way individual credit worthiness is determined. Although it’s not something that’s widely discussed or known about in the consumer world, businesses do have credit histories, and therefore detailed reports which give them scores. Read on to learn the basics about business credit scores and what you need to know.

How Business Credit Scores are Calculated

As mentioned above, a business credit score is measured very similar to the way individual scores are calculated. Meaning, the length of credit history, types of credit used, payment history, debts owed, and other factors. Unsurprisingly, the better a business handles its financials, the better score it earns.

Businesses of all sizes may need credit. A carpenter with no employees may want to borrow money to buy equipment. A marketing professional with a few employees may be ready to purchase furniture and computers for a new office. A salon owner with subcontractors but no employees may want to buy, rather than rent, commercial property. Any type of business could benefit from a business credit card. —US News and World Report

Of course, there are some differences, one of the most minor being the scores themselves. While individual credit scores range from a low of 300 to a high of 850, business scores range from 0 to 100, with 100 being the highest. Additionally, business credit scoring services use different models in order to determine the creditworthiness of companies. Also, instead of there being three main credit reporting bureaus for individuals, Equifax, Experian, and TransUnion, there are two principal business credit scoring entities: Dun & Bradstreet and Experian.

How to Improve a Business’ Credit Score

Since business credit scores rely on many of the same elements as individual consumers, nearly the same factors are used to assign a credit worthiness score. So, in order to maintain or improve a business’s credit score, companies must do the following:

Keep debts manageable. Opening too many accounts and taking on large amounts of debt will only increase your financial risk. This not only hurts your business’s credit worthiness, it also puts a lot of strain on you as the owner. This is why it’s best to keep your credit accounts to a minimum and pay off as much debt as possible.
Utilize different types of credit. Credit mix is also a consideration, meaning businesses having different types of credit accounts. While it’s advantageous to have various types of credit, it is equally advantageous to keep these to a minimum so you’re able to pay what’s owed in a timely manner. For instance, you might finance or lease vehicles through your business, have a business credit card, and maintain vendor credit accounts. All of these will go into determining your business’s creditworthiness.
Be vigilant with your personal credit. One misnomer that entrepreneurs have about business credit is that it’s somehow separate from their personal credit and/or financial responsibilities. However, this is completely false. Business credit accounts almost always require an individual or personal guarantee. This of course means that if the business defaults on a line of credit, you are personally responsible for that particular debt. Moreover, business credit is partially scored on your personal credit, so it’s best to maintain a good personal score for the benefit of your company’s creditworthiness.

What other suggestions do you have about maintaining a business’ credit score? Please take a moment to share your thoughts and experiences so others can benefit from your perspective! Interested in learning more about business? Then just visit Waters Business Consulting Group.

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3 Biggest Signs of Early Startup Success

June 28, 2018 No Comments

It’s not always easy to know where you stand. Sure, you’ve made it this far and there doesn’t appear to be any big trouble on the horizon. In fact, things are going quite well. Yet, you wonder if it’s just a matter of perception. Or, is your startup really going to make it? Well, there is no guarantee. But, that certainly doesn’t mean you can’t size the situation up at all. There are a few ways to tell if your startup is on its way to success. Why Most Startups Fail Of course, you should first know what causes most startups to fail. Perhaps the largest reason is they run out of cash. Investors only give so much, both in money and time. If you’re burning through cash and there’s little or no profit, you’re obviously running a really big risk of going out of business. Another reason startups fail is due to a lack of clear strategy. Put another way, they don’t know the way and don’t have a concrete idea of how to go from one goal to another. Most startups fail. But there is a common thread among some of the most successful startups: Consumers, not investors or tech blogs, find them first. A few examples: Facebook, Instagram, Pinterest, Most recently: Snapchat. —Business Insider.com Then, there’s tons of bad advice. It’s out there and if you take the wrong advice, you’ll probably see the consequences quickly. That’s your chance to act and change course to make it a lesson learned. Another reason why startups fail is the market moves in an unexpected way. They just aren’t prepared for contingencies. Or, fail to make necessary adjustments when needed. 3 Biggest Signs of Early Startup Success But, how do you know when you’re on the right track? What tells you that things are not only going well, but likely to continue in a good direction? Here are the three biggest signs of early startup success to lookout for: Positive cash flow. It’s no mistake the first factor in failure is due to lack of cash. If your company is bringing in cash and making a profit (that is, your intake minus your expenses), then you’re definitely off to a good start. Customers find you. Take a quick look at the quote above and let that thought sink in for a moment. If customers are finding you without you having to identify and chase them down, you’re fulfilling a crucial need and that’s a really good thing. Rhythmic, rock solid team. Another sign a startup is on the right path is when it’s crew recognizes they work well together and work toward goals as a team for the good of all. It means the right people are in the right positions and that’s a huge factor in success. What other signs signal a startup will succeed? Or, what might happen which means there’s trouble ahead? Please share you thoughts and experiences by commenting! Interested in learning more about business? Then just visit Waters Business Consulting Group.

The Biggest Pros and Cons of Strategic Partnerships

August 27, 2021 No Comments

A strategic partnership can provide a number of advantages to just about any size business. In fact, it’s the reason that some multinational corporations team up together. Even though they have vast resources of their own, there are often specific tools, appeal to a certain base, experienced skill sets, and more which simply make it more advantageous to partner than do it on their own. Small businesses can likewise benefit from strategic partnerships much in the same way. However, just because there are some distinct advantages doesn’t mean these are always the best choice. Biggest Downsides of a Strategic Partnership There are drawbacks to entering into a strategic partnership. For instance, you must rely on this particular partner to carry out some responsibilities. How, when, and where should obviously be agreed on beforehand. But, this doesn’t necessarily mean it will all go according to plan. Then, there’s the matter of putting your reputation in the hands of another company. If you rely on your strategic partner to represent your business in any way publicly, you are obviously putting a great deal of trust and faith that they will execute accordingly and bolster your company’s name rather than tarnish it. One of the biggest mistakes business owners make is trying to do everything alone. To combat this error, business owners must hire and train the right employees. In addition, they should leverage strategic partners. So what is a strategic partner? A strategic partner is another business with whom you enter into an agreement that aims to help both of you achieve more success. —Forbes.com There is also the possibility that your strategic partner doesn’t truly possess the means and resources you think it does. In other words, you might have to put far more into the relationship than you get out of it. Of course, that would pretty much defeat the entire purpose of teaming up in the first place. Lastly, your strategic partner might be put in a position where they must decide between their own self-interest and their shared interest with your company — you likely know which they will ultimately choose. Biggest Advantages of a Strategic Partnership Of course, strategic partnerships aren’t always bad or no businesses would ever team up together. There are some compelling advantages to partnering with another company. Here are some of the biggest benefits of entering into a strategic partnership: More resources. The single biggest benefit is usually almost instant access to a greater amount of resources. By partnering with another business, you’re essentially expanding your own team and reaching more customers nearly immediately. More versatility. A strategic partnership can also bring with it various skill sets and experiences. Instead of having to seek out individual talent and spend time and effort to bring these things on board from within your own company, you already have an established organization to help your business grow. Different perspective. Perhaps one of the most valuable aspects of having a strategic partner is having another set of eyes and ears to examine situations. Rather than having to rely on just your own judgment, past experiences, and biases, you’ll have someone that has their own interest (and therefore yours too) at heart, which can be extremely beneficial in various sets of circumstances. What other pros and cons of strategic partnerships should be included? Please take a brief moment to leave a comment and share your thoughts and experiences so others can benefit from your strategies. Interested in learning more about business? Then just visit Waters Business Consulting Group.

3 Effective Ways to Beat Zoom Fatigue

March 23, 2021 No Comments

Zoom fatigue?!?! Yes. If you haven’t yet heard, Zoom fatigue is a real thing. The origin of the phrase is obvious. Still, some people are just hearing about it for the first time. Perhaps, because they are experiencing its symptoms. Regardless, Zoom fatigue can be harmful in a number of ways. So, read on to learn how to best deal with Zoom fatigue and what you need to know. What is Zoom Fatigue? Simply put, Zoom fatigue is a phenomenon that causes tiredness, along with worry and burnout. These emotions are due to the overuse of video or virtual communication platforms, most commonly videoconferencing. The symptoms come from excessive amounts of highly intense eye strain. Experts also say people seeing themselves during video chats also causes unnecessary stress and fatigue because their every movement is captured. Do you audibly sigh every time you have to log on to what feels like your thousandth Zoom meeting of the day? You’re not alone. While we’re all more or less used to video calls and meetings being the norm now, the newly coined effect of Zoom fatigue hasn’t gone away. Since working from home is here to stay, video calls are here for the long run too. This makes it incredibly important to find a way to prevent Zoom fatigue from taking over your workday. —Forbes Then, there’s the immobility of videoconferencing. Unlike speaker phone conversations, which are pure audio, people can walk around and think on their feet. But, that’s not the case with video. Lastly, there’s cognition overload, since non-verbal communication interpretation is so much more difficult between parties. All of these can contribute to Zoom fatigue, which leads to negative emotions, as well as poor work production. 3 Effective Ways to Beat Zoom Fatigue Fortunately, there are ways to deal with the digital burnout. If you’re tired of videoconferencing, you are certainly not alone. But, there’s more good news. You can effectively combat the effects of Zoom fatigue by doing one or more of the following: Disable the self-view feature. When you get up in the morning, get ready as you normally do, dressing up as a professional. You’ve done this countless times before and probably continue the habit, even while working remotely. Since you’ve already dressed up and are presentable, there’s no sense in looking in the mirror (or seeing yourself on video). So, turn off the self-view feature, which is one of the single biggest causes of Zoom fatigue. Take regular breaks. Okay, there’s nothing magical about taking breaks. It’s obvious advice. But, it’s also something people forget to do when they’re working virtually because they aren’t in their normal workplace. However, breaks are necessary throughout the day. From time-to-time, take a few minutes to walk around, get outside for a little while, and take regular breaks. Switch communications. If you’re feeling stressed and/or resentful of videoconferencing, then just switch up the way you communicate. Instead of video, use voice conferencing so you have more freedom of movement and can enjoy the benefit of thinking on your feet. What other suggestions do you have to combat Zoom fatigue? Please take a moment to share your thoughts and experiences so others can benefit from your unique perspective. After all, you never know who you’ll help out! Interested in learning more about business? Then just visit Waters Business Consulting Group.