A reader requested that I write a blog post about how my business and I became financially stable and established. Financial stability is a very critical part of growing your business to any level. If you’re personal credit is not good it doesn’t necessarily mean you will not be able to receive credit for your business. Here are 3 things to consider when looking to increase or improve your business credit or financial affairs:
1. Start-up with money AND a credit card that you will only use exclusively for business:
Having a credit card is extremely important when running a business especially in retail. You will need it to place orders for business cards, products, materials or deposits etc. There are so many ways to receive a credit card whether you have an amazing credit or a terrible credit. You can decide to be liable for your business card or have limited liability it’s all a matter of how you set up your bank account and business structure. Here are a few options:
- Sole Proprietorship: if you run a small business that is unlimited liability I would suggest getting a credit card are so that you’re not actually losing your own money if you have to file for bankruptcy. The credit card should be under a business bank account. Even though it is a business bank account you will still have unlimited liability for it. Either way you are still building a credit for your business just make sure it isn’t under your personal bank account.
- Bad Credit: There are a number of ways to apply and receive a pre-paid credit that you can use to help rebuild your credit. You simply give them a deposit for the credit card and they allow you to use the card as a credit card and make payments that will affect your credit report positively.
- Incorporated: when you incorporate your business it becomes its own person along with its own credit. That doesn’t mean you will automatically be approved for a business credit card most banks also take into consideration your personal credit but when a business is incorporated they can evaluate all of the corporations assets such as investors, business plans, financial reports and etc.
Having money is critical depending on the business you’re starting. I always suggest saving 3 months of personal monthly expenses and extra $3000 so that you can be comfortable when you start your first few months of business.
2. Look into your options for government funding or investors/venture capitalist:
I’m extremely fortunate to be a business owner in Canada and especially Quebec. There are so many programs and opportunities they offer to small businesses that meet all the right criteria.SAJE is a program that offers monthly income of up to $1600/month for 12 months and sometimes more if the business is promising. There are a number of criteria you need to have in order to be eligible but you can attend their information session to find out if you are actually eligible or not.
You can always conduct the appropriate research to find out which programs are available to you in your country/state/province. Normally you just have to pay a visit to your city’s or country’s information website. These programs give you a standardized income along with all the information to option loans, funding, information on start-up essentials and sales, etc. I have listed a few for Canadians and Montrealers:
Canada’s information website:
As for investors/venture capitalist there are a number of ways to find them. You can network in person at events or do some research online and once you find someone promising communicate with them via LinkedIn or email. Also, there is Angel Investors – it is essential lay a website that connects venture capitalist or investors with start-ups or businesses looking for investors. Here is there website: https://angel.co/montreal/investors
3. Pay your vendors and sub-contractors ON TIME:
Before I started my business I was often hired in start-up businesses. Something I noticed often in the small business sector is they were constantly late on their payments to their contractors, vendors and sometimes employees. This can seriously damage your creditably and credibility when it comes to requesting to do monthly payments.
Most vendors will ask for referrals and if the referrals are not good you will need to pay the full amount before the vendor your order out or provides you with any services… For example, if you’re purchasing a large order totalled at $10,000 you will have to pay it up front instead of having the privilege of making affordable monthly payments of $2,500. Or if you’re looking for marketing services instead of paying monthly fees of only $500/month you’ll pay an annual fee of $6000. Having financial credibility can really affect how fast your business grows. As a business owner who hires and purchases a lot I always make sure to pay my vendors and service providers on time.
I’ll post a second article on a few more ways to obtain a bit more financial stability for your business as well as your personal growth. Please if you have any special article request like my reader Dani, please send them in via email.
Thanks for reading!
Katie Raspberry | Creative Business Blog
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Attorney Sebastien Dube | Montreal Lawyer
Avocat Sebastien Dube | Avocat Montreal