Business Education

Why Getting a Bad Credit Loan for Your Small Business Is Usually a Bad Bet

You’ve probably heard the comparison before – starting a small business is like planting a seed. You want it to grow into something strong and successful. But, if you start off on shaky ground, that seed might not sprout at all. Sadly, this analogy has become a cliche, but it’s important to remember most unoriginal phrases were once profound. In other words, such a sentiment, even though overused, hasn’t lost its truth.

Now, let’s apply that lesson to the business world. Meaning, that when you start from a deficit, particularly one that’s so costly, it spells trouble. Applying this reality to entrepreneurship, if you have bad credit, you might think a bad credit loan is your only option. But let’s take a closer look at why this can be a big mistake.

The Heavy Burden of High Interest Rates

When you have bad credit, lenders immediately see you as a risk. So, they often charge sky-high interest rates. Imagine trying to run your business while carrying a heavy backpack filled with rocks. Each month, those interest payments can feel like extra weight on your shoulders. If your business isn’t making enough money, you could end up drowning in debt before you really even get started.

Short-Term Loans with Long-Term Consequences

Many bad credit loans offer quick cash. It sounds tempting, right? But these loans often come with short repayment terms. This means you’ll have to pay back the entire amount in a few months. If your business isn’t booming yet, how will you find the money? It’s akin to sprinting an entire marathon—you’ll tire out well before you reach the finish line.

Limited Funding Options

Using a bad credit loan can also limit your future funding options. When lenders see that you’ve taken on a risky loan, they may hesitate to lend to you again. It’s not much different from getting a bad grade in school. It affects your chances of getting into a better school or program later on. If you need more funds down the line, you might be stuck with few options and more stress.

The Debt Cycle Risk

It’s easy to fall into a debt cycle with a bad credit loan. You borrow money to pay bills, but then you can’t keep up with the payments. So what do you do? You might resort to borrowing again. It’s a slippery slope that makes you a hamster on a wheel, running hard but going nowhere. This can lead to more financial problems in the long run, making it harder to get your business off the ground.

Strained Lender Relationships

Bad credit loans often come with tight terms and conditions. If you miss payments, you will face hefty late fees or even legal action. This creates a stressful relationship between you and the lender. It’s basically the same as working for a boss who’s always watching you, waiting for you to slip up. Wouldn’t you rather have a partnership based on trust instead?

Alternatives that Don’t Break the Bank

While it feels like bad credit limits your options, there are often better choices. Many local organizations and nonprofits offer grants and loans designed for small businesses. These can provide the support you need without the heavy burden of high interest rates. Consider exploring community resources or finding a co-signer with better credit. Think of it as asking a close friend to help you climb a steep hill—you don’t have to do it alone.

Choose Wisely for Your Business

Starting a small business is exciting, but financing it shouldn’t feel like a game of chance. Bad credit loans can seem like an easy fix, but they often lead to more problems. Instead of strapping on a heavy backpack filled with debt, look for lighter, more sustainable ways to fund your dream. Your business deserves a solid foundation, not a shaky one. Select funding options that can help you flourish, not those that will keep you trapped in an endless cycle of debt.

Want to Accomplish More?

Do you want your company to grow faster and earn more while you spend more time with your family doing all the things you started your business to do?

We can make that dream a reality. Give us 30 minutes and we will show you how to get your life back. Skeptical? Good! Put us to the test.

You can call us for your free appointment at 480-636-1720, or, if you prefer, send us an email. You can also visit us at Waters Business Consulting Group to learn more about us and the services we offer.

Like this article?

The Entrepreneurs Guide to Vacationing

May 5, 2017 No Comments

If there’s one thing that successful entrepreneurs possess, it’s drive. The drive to start a business on a small scale and grow it to larger and larger proportions. The drive to make improvements and to learn from mistakes. The drive to encourage employees, professional associates, and friends to do their best and deliver on their promises. The drive to drive at practically everything, especially toward new goals. It’s hitting the brakes which often doesn’t come naturally. Though the idea of relaxing on a beach, hitting the ski slopes, or visiting a new destination might be intriguing and tempting, all can easily fall short because you won’t actually enjoy your vacation. Instead, you’ll be checking your smartphone and/or tablet, and might even phone-in now and again just to see what’s going on, and of course, to provide your sage advice. How to Take a Vacation from Your Business and Make It Work Why you ought to be concerned about your business while you’re away, you have to establish and respect some boundaries. It’s very difficult to put aside your business passion, but such a thing is absolutely necessary; and, it’s also quite healthy in more ways than one. While the human species is built, in-part, for work, it is also limited as to what it can handle. These are the reasons we feel tired after a day at work and why entertainment has risen to such a popular level for escape. Giving yourself permission to walk away from your company can be difficult. But if you can’t do it for yourself, do it for your staff: When you take vacation time, you’re setting a good example. —Entrepreneur.com Of course, such an escape can not only come from sports, books, television, and the like, but also from vacation. Some business owners actually go on vacation and never really leave their businesses, which is the definition of waste. When you consider the fact that someone would make plans, pay for travel and lodging, along with other expenses and not truly enjoy their time off, it makes the whole affair more costly and more unhealthy. I had a partner, in a previous business, who one time proclaimed with some sense of pride and peppered with a bit hint of martyr … “I HAVEN’T TAKEN A DAY OFF IN 5 YEARS”. Needless-to-say, he was and is a very hard worker, but reports from his remaining staff say the environment is like a “Salt Mine”! Everyone needs a break from work and that certainly includes business owners. When you start and build a company, it’s only natural to want to stay the course and keep your hands on the wheel. After all, the business wouldn’t exist without you and it wouldn’t be able to grow if you weren’t there. Though it might be difficult to take time off, it’s necessary and there are things you can do to take a vacation from your business and make the most of it: Have an action plan in-place. This isn’t a plan for you, but those who stay behind to run the business. It seems that Murphy’s Law takes effect the moment you aren’t present, so, have at least one contingency plan but don’t make it complicated. It should be easy to follow and simple. Know that you’ve invested in the right people. Your employees were likely hand-picked by you and this is a great time to see how well you chose your team members. Of course, there’s probably one who is a natural leader and who knows the business well to leave in-charge while you’re away. Disconnect from the day-to-day. You might check-in very briefly on a weekly basis, and that’s acceptable; but don’t give into the temptation of running your business from a distance. In our time, technology allows us to connect at any time and share information in moments. Those moments are just too precious and you need to disconnect. Put your family first. Okay, so your conscience is telling you that you work too much, too long, and don’t spend enough time with your family but you don’t change. This is the time when you can spend quality time and create wonderful memories. I have a client who hired my company in 2011 to help his retail business during the rough economic recession. He said that he was at his limit, and was ready to “throw in the towel”. Besides helping this client to recover, improve sales, cash flow, moral and pay down past debt and taxes, our Client wanted more time off with his family and vacations. The time off and vacations appeared to be a distant goal given the carnage left from simply trying to survive the recession, but we developed a strategy and took action weekly to clear up the past taxes and debt while helping him pursue his goal of time off and vacations. In 2013 he took time off and this motivated him to do it again. In 2014, our Client planned a family vacation for the summer. So, we helped our Client plan out and detail the specific and critical business metrics that needed to be managed by each of his team while he was gone. My Client reviewed this plan and his expectations on the metrics and operations protocol (i.e. Leads, Sales, Cash Receipts per Day, Deliveries, Installations, Service, and how to handle emergencies) with his Team. When he returned from his vacation, I asked; “how was your vacation and how did your team handle your being away for 10 days?” His response, “this was one of the best family vacations I’ve had in a long, long time, and there were very few issues while I was gone … I am looking forward to doing it again”. My Client took another week in Montana in the fall of that year, and 2014 ended up a record year in sales all while he built a team that will continue to allow him more vacations and time off

How Small Business Owners Can Stop Themselves from Rationalizing Bad Decisions

June 16, 2023 No Comments

Running a small business comes with its fair share of challenges, and one of the most critical aspects of success lies in making sound decisions. However, human nature often leads us to rationalize bad decisions, which can have detrimental effects on our companies. As a small business owner, it’s crucial to recognize and overcome this tendency to protect your business’s long-term viability and growth. So, let’s take a few moments to describe some effective strategies that entrepreneurs can use to prevent themselves from rationalizing bad decisions and safeguard their companies. How Small Business Owners Can Stop Themselves from Rationalizing Bad Decisions Okay, every small business owner makes bad decisions from time to time. But some owners are better at recognizing and correcting their mistakes than others. Here are a few tips for small business owners who want to stop themselves from rationalizing bad decisions and start making better ones: Be Aware of Your Biases We all have biases, and they can often lead us to make bad decisions. For example, we may be more likely to trust information that confirms our existing beliefs, or we may be more likely to make decisions that benefit us personally, even if they’re not in the best interests of our business. The first step to overcoming our biases is to be aware of them. Once we know what our biases are, we can start to challenge them and make more objective decisions. Conduct Thorough Research To avoid rationalizing poor decisions, it’s essential to gather as much information as possible before making choices that impact your business. Invest time in conducting thorough research, analyzing market trends, assessing customer needs, and evaluating potential risks. This data-driven approach will provide a solid foundation for decision-making and reduce the likelihood of rationalization based on incomplete or biased information. Get Input from Others Sometimes, the best way to avoid making a bad decision is to get input from others. This could include your employees, your customers, or even your friends and family. When you get input from others, you get a different perspective on the situation, which can help you to make a better decision. Set Clear Decision-Making Criteria Establishing clear decision-making criteria helps in maintaining objectivity and avoiding the temptation to rationalize bad choices. Before making any important decision, define the specific criteria that must be met for it to be considered valid. These criteria could include financial viability, alignment with long-term goals, or alignment with the company’s core values. By adhering to these pre-established criteria, you can prevent rationalization and maintain a strategic focus. Take Your Time Of course, you shouldn’t feel pressured to make a decision right away. Sometimes, the best decision is to wait and see how things develop. If you take your time and make a decision when you’re calm and collected, you’re less likely to make a mistake. Be Willing and Able to Change Your Mind Even if you’ve made a decision, be willing to change your mind if new information comes to light. It’s important to be flexible and adaptable, especially in an ever-changing business world. Let’s face it, most of the time, the biggest obstacle and the most harmful person in your way is typically the face in the mirror. All of us make bad decisions, even when we know better because it’s all too easy to rationalize in the moment. Additionally, it’s a good idea to build a culture of accountability within your business is crucial for preventing rationalization. Encourage your team members to take ownership of their decisions and actions, and create an environment where open and honest feedback is valued. Foster an atmosphere where mistakes are seen as learning opportunities rather than reasons for blame. When individuals feel accountable for their decisions, they are more likely to critically evaluate their choices and avoid rationalization. What other suggestions do you have other business owners can use to stop making rash decisions? Please, go ahead and comment so others can benefit from your input and perspective! Interested in learning more about business? Then just visit Waters Business Consulting Group to learn more about us and the services we offer.

How to Hire a Replacement for a Key Role in Your Small Business

September 28, 2023 No Comments

Hiring the right replacement for a key role in your small business is a critical decision that can significantly impact your company’s success. Whether you’re replacing a retiring employee, filling a newly created position, or addressing a talent gap, the hiring process should be thoughtful and strategic. How to Hire a Replacement for a Key Role in Your Small Business Obviously, hiring a new employee is always a big decision, but it’s especially important when you’re a small business owner and you need to find a replacement for a key member of your team. The wrong hire could have a major impact on your business, so it’s crucial to take your time and get it right. In order to make the right decision, you need to not only follow your gut and listen to trusted sources but also do these five things: Assess your needs. Before you start the hiring process, take time to assess your business’s needs. Clearly define the role you are looking to fill and identify the specific skills, qualifications, and qualities required. Consider both technical skills and soft skills like communication, adaptability, and cultural fit. Update the job description. Craft a detailed job description that accurately reflects the role’s responsibilities, expectations, and qualifications. Be transparent about your company culture, values, and mission to attract candidates who align with your business’s ethos. Consider remote talent. In today’s digital age, remote work is increasingly common. Don’t limit your search to only local candidates. Opening up the position to remote talent can significantly widen your pool of potential replacements. Screen resumes and applications. Review resumes and applications carefully, looking for candidates who possess the qualifications and experience outlined in your job description. Look for relevant work experience, education, and a track record of success in similar roles. Conduct thorough interviews. Conduct in-depth interviews with candidates to assess their skills, qualifications, and cultural fit. Use behavioral interview questions to gauge how candidates have handled specific situations in the past, as this can provide insight into their future performance. The specific skills and qualities that you look for in potential candidates will vary depending on the specific job requirements. However, some general skills and qualities that are important for any small business employee include: Hard skills: These are the technical skills that are necessary to do the job. For example, if you’re hiring a customer service representative, you’ll need someone with strong communication and problem-solving skills. Soft skills: These are the interpersonal skills that are essential for working well with others. For instance, you’ll want someone who is a team player, has good communication skills, and is able to handle stress well. Cultural fit: It’s important to find someone who will fit in with your company culture. This means finding someone who shares your values and who is a good fit for your team. In addition to the above skills and qualities, you may also want to consider the candidate’s experience, education, and references. By taking the time to find the right person for the job, you can ensure that your business is in good hands. Hiring a replacement for your small business is a significant undertaking that requires careful planning and consideration. By assessing your needs, crafting a compelling job description, and following a thorough hiring process, you can find a candidate who possesses the skills and qualities necessary to contribute to your business’s growth and success. Remember that hiring is not just about filling a position; it’s about building a team that aligns with your company’s vision and values. Interested in learning more about business? Then just visit Waters Business Consulting Group to learn more about us and the services we offer. You can phone 602-435-5474 or send us an email.