10 Business Tips to Live By!

The following is for those who have, do, or want to own a business. You just may find a gem herein to help you find your acre of diamonds and keep them.

Premise: It is my observation during my business lifetime that those who successfully choose to own their own business are confident, creative, some what disciplined, persistent, optimistic and typically genuinely unaware that 90% of their business and personal problems are usually self induced.

If that seems harsh to you, then the following tips may remind you of some basics of business life that often get overlooked while meeting your responsibilities to yourself, your family and others who may care in seeing you succeed.

1. Entrepreneurship

An entrepreneur, with a great business vision, a modicum of capital, a dogged determination and a learning attitude, can build a business by the seat of his/her pants until he/she achieves a personal comfort level, at which time the entrepreneur must transition to being a professional manager to reach higher heights.

The key element of building a long time successful business is learning to plan, organize, delegate and manage the successes and stresses of being — the boss.

2. Every successful business will eventually be sold or closed.

Understanding the above fact is essential to remaining in control of your business destiny.

Sickness, disablement, divorce, death, retirement and a myriad of other reasons to move on are all reasons a business may have to be sold. Therefore, operating your business to be salable, at any time, will provide you with the best long term outcome, whenever a sale is necessary.

Operating a business with the prime objective of tax minimization is short sighted, as it will then take three years on average to prepare your business for a top dollar sale.

If time and circumstances do not allow the tax minimizer to reposition his business for sale, a life time of building business “market value” will can quickly turn to pennies on the dollar and may go to zero. Business buyers purchase a reliable stream of adjusted discretionary cash flow and rely solely on the past three years tax returns to determine market value.

3. Availability of capital is the life blood of a stable and growing business.

The best and least expensive capital is cash earned and saved.

The profits generated by owning and operating a successful business are the just compensation for the sacrifices made to build an stream of continuing income from your enterprise.

Separate your rewards into two baskets, one to maintain a comfortable life for you and yours and one to meet, and beat, Murphy’s Law and/or provide the seeds from which more rewards can grow.

4. You can not borrow your way to riches.

Business debt should be avoided like the plaque, unless the use of borrowed funds will generate at least 25% more cash flow than expenses and the principal and interest on the incurred debt.

Purchased business assets depreciate with time and incur additional overhead and required maintenance. Part of graduating from entrepreneur to a professional manager is learning, and mastering, how to figure return on investment (ROI). An asset is generally only worth the value of a provable, risk free, stream of of bottom line income. It is that excess earning power that will justify a cash and/or financed purchase.

5. Sales vs Gross Profit

It is true that nothing happens until something is sold. However, purchasing at the proper price, whether it be materials, products or labor will determine ultimate profitability.

The concept of buying low and selling high is simple, but like poker, the game is simple to learn but takes a lifetime to master. Entrepreneurs typically spent more time controlling fixed and variable overhead and not enough time on gross margins.

Professional managers learn that a dollar increase in their gross profit margin goes straight to the bottom line and into the owners pocket.

6. Customer diversification

It’s a no brainer to say that there is safety in numbers when it comes to your customers.

In the life time of a business, there invariably will come a time when a very profitable customer will fall in love with your company and bless you with ever increasing business. Beware of the fact that as that customer grows to be a larger and larger percentage of your total sales, the risk to your business increases dramatically.

Large customers, over time, will use their sales volume to erode your pricing power. More businesses have failed from allowing their largest volume customer to eventually hold them at ransom by forcing them to choose to produce at zero profit or lose the largest part of their sales volume.

The general rule is to not to allow one customer become more than 20% of your sales.

7. Accounts Receivable

If you extend credit by giving customer payment terms, you become a banker.

Entrepreneurs can grow their business by extending favorable terms, if their margins are high enough to cover the opportunity costs as opposed to cash sales. Professional managers understand the costs of credit terms and pass them on in higher prices. Needless to say, managing credit sales is a complicated subject and is subject to common practice in the type of product, service or industry within which your business falls.

As a general rule, from a safety point of view, cash sales are preferred, credit card sales are the next best option but if you have to extend credit, operate it like a profit center not as a service. In addition, there is safety in many customers. If you only have a handful of customers and you extend them credit, it only takes one to go belly up to seriously damage or sink your business.

8. Accounts payable

If your suppler offers net 30 billing, ask for a 5% or 6% discount, if paid within 5 to 10 days. If you have followed the advice in number 3 above and have set aside a basket of cash for growth and emergencies, the ability to take that discount will go straight to your bottom line.

9. Bookkeeping

Unfortunately this is a sore subject with me, as typically many entrepreneurs and professional managers are notoriously weak in this area.

Too many business people think of keeping the books as a necessary evil to be pushed off to a bookkeeper or an accountant until tax time. The truth is the keeping of financial records, checking them daily and learning to interpret them is probably the most vital aspect of becoming and staying a successful business owner. In short, your “books” are the best management tool an owner has at his/her disposal, if kept meticulously, understood and used properly.

A monthly Profit & Loss Statement (P & L) and a personally checked balanced bank statement that is read and understood is an absolute minimum survival requirement for every business owner.

Businesses are complicated, no mater how simple they may seem. Running a business and living out of a checkbook doesn’t cut it. An accurate and frequent P & L statement is a must for an owner to know if things are going well or to recognize when things are getting get out of whack.

Do you know that 1 out 10 small businesses get ripped off by the trusted in house bookkeeper, because the owner wasn’t paying attention with good financial controls? How will you get a loan from a lender, if you can’t quickly produce a P & L to prove you deserve one. I could go on and on.

Every business owner, who isn’t an accountant, should take a few accounting courses or at least read up and understand the concepts. Your financial records are like having an X-Ray picture of your business at your beck and call. Becoming versed in the the financial aspects of your business can be the most valuable asset you will ever own.

10. Living the good life as a business owner

People go into business for many reasons, but usually it because they want to be their own boss, answer to no one but themselves, build a better life than can be accomplished having a JOB and serving their own ego. Needless to say, if owning a business and being successful were easy, everyone would be doing it.

That said, successful business owners are unique in that they work harder, smarter, longer, usually have better incomes and are more responsible citizens than “normal” people. On the the other side of the coin, business owners are also subject to more stress, family problems, self doubt, loneliness and political disrespect. Both sides of the coin come with the territory, so how do you balance it all to be respected, live a good life and be “content”.

Here is a few humble suggestions, in no particular order, from a curmudgeon who cares:

  • Remember the rainy day basket and keeping your business salable, — stuff happens and so does retirement
  • To err is human, don’t be too hard on yourself when your are not perfect
  • Compartmentalize, give business and and loved ones and friends equal time and effort
  • At the end of the business day, briefly plan tomorrow, take a moment to decompress and get lost in your mode of peace until tomorrow
  • When the stuff hits the fan, take a deep breath, relax and quietly fix it
  • Realize you can’t know, or be an expert in, everything, — develop a trusted mentor and use him/her as knowledge source and sounding board
  • There are only 24 hours in the day, block out time for each day’s priorities, including family, friends, confidants and your personal self
  • When faced with a tough decision, in the final analysis, trust your gut
  • Love what you do and love those that you you do it for
  • Laugh a lot, it will keep you sane

How You Can Get Business Credit Cards Even With Bad Credit

A business or a corporate credit card can help you obtain the buying power you need to run your company and keep your business’s expenses on track. Some cards also reward you in the form of cash back or airline miles for all your business purchases. While the business lending landscape has been constantly improving over the past few years, it is still challenging for companies that have less than stellar credit histories to obtain credit. Many banks are not willing to provide loans to business owners who have bad credit scores. Here is everything you need to know about getting business credit cards with bad credit.

Advantages of bad credit business credit cards

There are several advantages of such cards including, avoiding mix-up of personal and business transactions, easy management of employee spending, easy itemization of business expenditures, a good start for establishing excellent business credit, and huge discounts!

Budding entrepreneurs with bad credit usually hesitate to apply for a corporate credit card and small business loans. They believe that their poor credit history may be a stumbling block in their path to obtain corporate credit. However, there are still a wide variety of options available if you’re an entrepreneur with bad credit.

Apply for bad credit business credit cards at your own financial institution

You don’t have to go elsewhere to apply for your card. Consider applying at your existing financial institutions and banks. This will help you speed up the loan approval process. Your bank already has access to your financial records on file and they might consider your application despite your bad status.

Stick with one card company

There may be several offers, but it is always best to avoid card hopping and stick with one card company while you are trying to build your credit history. Do not sign up for multiple card offers in haste; this will not only make it complicated for you to manage your finances, but will also impact your credit score negatively.

Keep all your financial documents ready

Despite your poor credit status, the chances of you getting a business credit card are high if you can present the documents that will testify to your company’s financial stability. You can submit updated balance sheets and income statements together with your application form.

Establish a Separate Credit Line

Establishing a separate business credit that is different from one’s personal line is a logical way for entrepreneurs with bad credit. You can start by creating your own business credit account and by paying all your business bills on time. Ask your business credit card company if they provide financial reports to credit bureaus. And if they are not already doing so, you can request them to do so. Most companies are willing to do this at your request.

Make it a point to avoid your corporate credit card’s cash advance feature, as this will only incur more fees and costs. You must only use the account debt when your small business needs immediate funds. Paying online for your card bills will also help you save on processing fees rather than through your local branch or by post. Bear the above points in mind and avail business credit cards, even with bad credit!

Business Credit Card Benefits

Business credit cards are a modified version of a personal credit card. Here are some of the most common incentives for using a Business Credit Card for your own business.

Managing Personal Expenses and Business Expenditures

For the small business owner operating from home, or for those who just need an easier way of separating personal finances from business expenses, a business card may be the solution to accurately managing both. Besides the detailed monthly reports included with the statements, yearly summaries may be requested or provided that simplify bookkeeping and cut down on administrative costs.

Owners of small businesses who may have several employees who have employee business credit cards on the owner’s account are able to quickly monitor spending, and also set individual credit limits for each employee card. Expenses and spending habits can then be sorted by department, making everything from organizing and paying taxes to ordering inventory considerably easier.

Business Credit Cards Low Interest Rates

A variety of cards offer low interest rates to attract new businesses, with some even offering deals such as 0% for an introductory period of time. Introductory periods, depending on the business credit card, usually last anywhere from as little as three months to as long as a year. The key is keeping track of this period to ensure that either the bill is paid in full to avoid accruing finance charges, or preparing for an adjustment in the monthly amount due.

Some offer attractive grace periods, allowing smaller business to make purchases without worrying about paying the bill in full at the end of every billing period. An account in good standing will usually qualify for a lower interest rate after a certain amount of time. After the introductory period, inquire about any lower available rates for your card rather than switching to another company or opening another account.

While even a small business may need more than one credit card, having too many open accounts often reflects poorly on a credit report, causing future creditors to consider the company a potential risk.

Incentives and Rewards

Nearly all offer some type of incentive or reward program, helping cardholders save money and earn discounts on other services or goods. Cash back bonuses are an attractive feature for owners of smaller businesses or entrepreneurs who may have few resources.

Some companies feature promotional periods where every dollar spent earns a point redeemable for future purchases through various merchants. Some of these points may expire after a certain time, so be sure to pay attention to dates, or use a card with no time limits on points earned.

Merchant discounts are yet another incentive for small business owners as many credit cards partner with other companies, often referred to as affiliates, to offer customers discounts on purchases such as office supplies, or travel expenses. Gas rebates and airline travel miles are also common incentive programs for business owners to take advantage of.

Convenience

Since most are recognized globally, foreign travel and conducting business in other countries is decidedly more convenient. Also, unlike business checks, credit cards may also be used electronically for purchases made over the internet or telephone, and there’s never any time wasted waiting for the checks to clear through international banks.