Owning a small business comes with a lot of responsibility. After a few months, many business owners start getting into an every day routine and have a stronger grasp on how operating a business works but are always looking for small business tips.
All business owners should be looking to improve their operations. We here at Roan Capital Partners have put together a list of the four things business owners should be doing that may have slipped under the radar.
Check out the list below and let us know any of your tips in the comment section.
1. BUILD THE CREDIT OF YOUR BUSINESS
An item many business owners may not think about is building the credit score of the business. Like a person’s credit score, every business has a score which tells financial institutions if the business can pay back any loans.
“A business credit score is not really what a personal credit score is, but the business has its own credit score too,” said James Ferguson, a Certified Financial Planner and Managing Partner of Roan Capital Partners. “When owners are going through the first couple of years and are going to try and get any kind of short-term financing, loans, and credit lines, they need to check on their credit score.”
It is important for business owners to keep their personal credit separate from the business credit. This can help minimize any negative marks from personal credit bleeding over into the business credit. Keeping it separate also helps provide protections by showing the business is separate from the owner.
Some tips to build up a business credit include: obtaining a federal tax identification number, getting a business credit card, and establishing a line of credit with vendors and suppliers.
2. APPLY FOR LOANS WHEN YOU DON’T NEED THEM
Every business is going to need capital at some point for a variety of different reasons. Whether it is for growth or capital expenses, having extra capital will become a need at some point.
“When you are going to apply for financing, whether it be a loan or a line of credit, do that when you don’t need it,” Ferguson said. “Don’t wait until close to the time when you’re going to need it. When they look at your business bank account, which is what they’re going to look at, and it’s not as strong as it was before, they are going to look at you as a risk.”
It is smart to get financing when you don’t need it instead of waiting until you do. There are two reasons for this. One is a business owner may not be able to get the capital when needed and two the terms may not be as attractive.
3. RESEARCH MARKETING
When deciding to grow, each business needs to have a plan in place to market services to new customers.
There are a few questions every business owner needs to ask before starting the growth phase of the business. Those include:
- How am I going to reach my new customers?
- What services do I need to meet my goals?
- How much do those services cost?
- How am I going to pay for those services?
- Do I have a way to calculate your return on investment?
Figuring out these questions before going into growth mode will help the business in the long run. It will also help alleviate some stress from business owners by having a plan in place and conducting initial research.
4. BE PATIENT
Moving from survival mode to growth mode in a small business takes time. A lot of time. Learn to be patient and understand the business may not move on your time.
“It takes longer than you think to get your business to a point where you don’t have the start-up expenses,” Ferguson said. “The start-up expenses are important but figure out what the priority is. You’re not going to be able to do everything all at once so figure out the timing of different phases from beginning to growth.”
Understanding where your business is at in terms of financial and customer acceptance will help an owner navigate through the different stages of owning a business. Exercising patience is the hardest thing on this list but also the most important.
As the old saying goes, Rome wasn’t built in a day. A business is the same way.
We hope these tips will help any small business owner. If you have any questions or would like to reach out about some of these tips, please call us at 423-863-5512.