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.

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Should You Scale or Scuttle Your Startup

May 16, 2017 No Comments

When business begins to slow, your sense of confidence can slide, and it’s a scary sensation that usually follows. Facing the possibility of having to close the doors isn’t a pleasant one, and, you could feel like a complete failure. Before you begin to pack-up your office, take some time to look at the situation objectively. Ask yourself what’s the most likely cause and begin to take steps to solve rather than scuttle. If you are experiencing a steady slide in sales, there’s obviously a reason why that’s so. The good news is, there are always options, which can range from scaling out, scaling down, or, shutting down. The latter might not be the most welcome, but, sometimes it’s the best option, providing you with an opportunity to try something else. How to Solve the Scale or Scuttle Situation Should you be facing a mountain of bills, not seeing a jump in revenue, and having to cut back where you’ve never cut before, it certainly can be frightening and frustrating. The first place to begin is with yourself, your emotions, dreams, and, mental state. If you’re in a situation that simply taxes you too much and drains your energy, you ought to consider closing and starting fresh with something new. However, if you believe you can turn things around, you should seriously consider scaling down or out. …you’re stressed out, your relationships are fraying and your resolve is destroyed. Nevertheless,you must take action in order to end the turbulence with as much poise as possible. You can’t change the past, but you can certainly determine how you [proceed]. —Entrepreneur.com Scaling down is obviously taking measures to reduce your business workload to concentrate on key accounts. Scaling out isn’t the same as going up, it’s more lateral, providing more of what you already do, not offering new things. If you’re still wondering which way to go, take the following into consideration to make an informed, well-thought decision: Look at your workable options. One mistake some failing businesses make is to hammer a square peg into a circle, meaning they attempt to go beyond their core competencies, and, that’s just not a good idea. You’ll nearly inevitably see this backfire and make things go from bad to worse. Be prepared to stunt growth. Some businesses falter, not because of the lack of revenue, but because they take on too much. Should you and your team be stretched thin, it’s time to scale back and produce the best you can deliver. What you’ll find is more happy customers, co-workers, and self contentment. Get some unbiased advice. An outside view by an experienced business consultant can shed a lot of light on problems you didn’t even realize existed. Have your business evaluated and get some helpful advice that isn’t tainted by being too close or too attached. Know your company’s limits, and, its potential. Here again, if your company can’t comfortably keep pace with demand, it’s time to pull back and deliver quality over quantity. Should you be experiencing a spike, consider your business’ potential and grow incrementally. Understand your cash position. Having less cash isn’t necessarily or always a bad thing. It causes you to look at and prioritize expenses, weeding out what’s not needed. You’ll find creativity if you don’t succumb to fear. Another factor you’ll have to face is the emotional adjustment. We’re told all our lives that quitters never win and winners never quit, but, that goes against reality. Be willing to make an emotional adjustment and deal with the reality. [shareaholic app=”follow_buttons” id=”26833294″]

Dunkin’ Donuts just Streamlined Its Menu — Is it Time for You to Do the Same?

January 22, 2018 No Comments

Dunkin’ Donuts just reduced its menu offering by 10 percent. While that doesn’t seem like a big decrease, it actually is. The company is removing afternoon sandwiches and some other items, starting New England, then onto the rest of the country. The reasons are obvious — some food choices just don’t sell nearly as well. But, it also represents a sound business practice. That is, the strategy of streamlining. Why Streamlining should be a Top Priority Business owners are go-getters. They look for the right people and avoid toxic personalities. But, they also can easily fall into a routine. After all, once a measure of success is achieved and maintained, it’s actually difficult not to fall into a routine. However, this usually presents a problem. It stops you from innovating or looking at things through a different prism. In short, it’s a comfortable but dangerous place. Streamlining your business removes wasteful or redundant steps to improve efficiency. Streamlining may involve modernization of your equipment, outsourcing organizational activities, and minimizing low-performing products and services to focus on what your company does best. In business, time is money, so a small business achieves several financial and operational advantages from streamlined operations. You reduce costs, attract more customers through nimble response times, drive higher revenue and compete effectively. —Biz Fluent.com It’s dangerous because you can no longer effectively see your blind spot. And, seasoned business professionals know once you stop seeking out an edge, you’re in for trouble. Take the defunct Blockbuster chain. One time a huge success, it fell prey to its own slow and stubborn adaptation of streaming. The list it joined is very long. This is where streamlining comes into play. It forces you to rethink a lot of things; and, that’s good. How to Streamline Your Business But, what can you streamline if you feel your company is already efficient? The answer is likely longer than the following suggestions. Think of these as a good jumping off point. From there, you can take more steps. Here are some helpful tips for how to streamline your business: Go paperless. While there are certainly industries where paper is a logistical and legal necessity, there are far more which simply don’t need paper. Go paperless wherever you can. This way, you’ll cut down on sorting and sifting when you need to find a specific document. Outsource. This is a great way to increase overall productivity. It’s also some entrepreneurs worst nightmare because it gives a level of control to others. But, the benefits far outweigh any negatives. So, give outsourcing a go and reap the rewards of higher productivity in shorter amounts of time. Automate repetitive tasks. Every business has those monotonous, repetitive takes. Identify these and then seek to automate them. Doing so will free up a little more time and also take the boring feeling out of doing them. Reduce your travel time. Let’s face it, when you need face-to-face meetings, you don’t have to travel across the state, county, or country. You can use video and voice conferencing. This not only cuts down on travel time (which is generally unproductive), it also reduces travel expenses. What’s more, it’s very convenient. How do you streamline your business? What steps do you take to make it more efficient? Please share your thoughts and experiences by leaving a comment! Interested in learning more about business? Then just visit Waters Business Consulting Group.

Hurricanes, Wildfires, and Earthquakes: How Business Owners Can Effectively Deal with Big Problems (Without Ignoring Smaller Ones)

February 13, 2025 No Comments

Two monstrous hurricanes hit the southeast late last year – Helene and Milton. Weeks later, ferocious wildfires engulfed southern California. This past Sunday, earthquakes shook Greek islands, followed by a pair of earthquakes rocking San Bernardino on Monday.