There are two very common mistakes the business owner or entrepreneur make in the beginning stages of their business when acquiring capital and building business credit. Before I go into them, I’d like to share my empathy and understanding of these mistakes made as a fellow business owner myself. In the very beginning, you are responsible for every single thing in your business; from sales to marketing to payables to receivables to hiring to firing etc. It’s natural for these mistakes to get made because the average business owner doesn’t know how to avoid these mistakes due to lack of information and time. Yet, those are the most precious items to a business owner; time and information. However, the third important item is cash. The more cash you have; the longer you keep your doors open.
Today, I want to talk about two common mistakes that business owners make that prevent them from getting the cash or business credit they need to grow their business.
First, have a business phone number, don’t use your cell as your business number. Lenders hate this. When you apply for a loan or a line of credit, the lenders will verify your business by its phone number and address. If the phone number is your cell phone, you are increasing your chances of getting denied significantly. After all, if you don’t pay back your loan or line of credit, the banks will want to be able to have more recourse to collect and if they only have your cell, that proposes more risk to them. And banks hate risk.
There are many options out there that will allow you to still use your cell phone, but have a registered business phone number. After all, if you are just starting off or only have 1 employee, yourself, why spend so much money in a professional phone system? It doesn’t make sense to make that investment this early in the game. There are companies like Fonality and Ring Central that will provide you with an actual business phone number, registered with 411, and it can be forwarded to your cell. You’ll get a professional phone greeting and all the bells and whistles without an expensive phone bill.
The last most common mistake, is using your home address on your business docs. This is common when the entrepreneur starts off because most businesses start on the kitchen counter on a napkin. A physical office may not or does not come into the equation until months or years down the road. Using your personal address also scares off lenders because of the “risk” factor. Lenders have technology built into their application platforms that can automatically detect a residential address. Also, having a business address makes you appear more professional in the eyes of lenders as well as your customer. Like phone numbers, there are cost effective options for business addresses. Regus is a company that has been around for decades and they provide businesses with virtual offices. For a low monthly fee, you can have a physical location that you don’t have to go to everyday without all of those expensive office contracts. Your mail goes to this address and lenders recognize the virtual office as an actual business address.
I hope this information was helpful and my intent is to help you, my fellow business owner, avoid the mistakes I made early in the game as well as help you access the cash or business credit you need to grow.
