Here's what I learned about business credit the hard way. And what you could probably benefit from.
Business credit is a critical yet often overlooked aspect of running a startup venture. I discovered this firsthand when I launched my first startup.
For any entrepreneur, understanding how business credit works is critical. I've learned that it's not about having access to capital – but more about building a financial foundation to support your vision.
Strong business credit opens doors to operational flexibility and long-term growth. In our case, once we built our credit, we were able to negotiate more favourable terms, and significantly improved our cash flow.
The real challenge? Building and maintaining a healthy credit profile. It's a journey that requires patience, diligence, and strategic thinking. Here are some lessons I've picked up while seeking debt funds as a startup:
Establish formal credit lines as soon as possible. Open a business bank account, get a business credit card, and start working with vendors who report to credit bureaus.
Leverage your business plan. We found that a solid business plan goes a long way when negotiating with lenders. It demonstrates confidence in our ability to repay.
Be transparent about your financials. I've learned that being upfront about our financial situation, including both strengths and challenges, builds trust with lenders and leads to more favourable terms.
One last thing. Traditional banks aren't always the best fit for startups. Diversifying our credit sources gives us more flexibility and bargaining power.
Leveraging business credit has been a journey of continuous learning for us. Do share your own lessons from raising funds for your startup.
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