A warning from history
Many years ago now, we did some work with the owner of a small plumbing business.
Salt of the earth guy. The sort of person who would do anything for you.
His customers loved him and he provided a great service, as far as we knew.
But he had a problem.
He was terrible at running the financial side of his business.
He would run up tremendous bills with wholesalers until they refused him any more credit.
He would move from one wholesaler to another, racking up his account bill, until there were very few who would help him.
And when you're limited by supplier you have very little choice on where you can go, and therefore what you can pay for goods.
This became a vicious cycle he couldn't get himself out of.
He'd pay back one supplier enough to unlock credit, but he would run out of funds while he paid off others for which he'd paid premium prices.
He could never get his head above water.
As your company grows, credit might be your main lifeline.
You may need access to more suppliers, or to hire more staff.
You might need more office space, or to acquire additional insurance policies.
You might need credit or to take out loans to facilitate these. But with poor business credit, getting approval can be more difficult.
To keep good credit, pay off all your debt as soon as possible.
For example, don't let your business credit cards run a balance for more than a few weeks. Likewise, don't run up supplier credit bills beyond what you can afford to pay back at the end of each job.
Today's small business tip is: only seek funding that you can quickly and easily repay.
Keeping a beady eye on your finances will help in planning your financial outlay. The latest online bookkeeping platforms, such as QuickBooks, certainly help here.
If you'd like to have a look at how it works drop me an email and we can take a look together.