Your business plan. The core vision and focus of your ideas, aspirations and dreams. Something which cannot be taken lightly, undervalued or overlooked. When approaching this topic and making decisions in this area there are some key things you need to consider, in order to make a responsible and financially sound choice.
Maybe you’re a one-man band or part of a team and are making this decision on behalf of others, either way the core of your decision-making process remains the same. It needs to be constructive, practical and make sense for your business as a whole. Where does it fit into your business plan and how can you take advantage of it to achieve wider success?
So What Are The Core Things I Need To Know And Be Aware Of?
One of the first things is understanding the sort of mindset you need to adopt when taking on credit to finance your business plans.
Managing credit requires:
- A level of responsibility
- A trusted credit partner
- The right research
- Confidence in your plans and business vision
- The right fit for your business or venture
- An understanding of all your financial commitments as a whole
To manage it effectively you need to:
- Know what your limits are
- Know when repayments are due
- Know the duration of your contract
- Understand late fees
- Understand the interest in detail
- Have a full repayment plan in place
Leveraging credit can be hugely beneficial to the plans you want to carry out regarding the growth and success of your business or company. It kind of goes back to that old saying “you have to spend money to make money”. Not always true, but in the case of using credit to fund your ideas, this can be a gamechanger and should be taken very seriously as a route to move forward.
Taking on credit can have risks and affect you by:
- Damaging your credit rating
- Having consequences for your overall business
- Leading to larger repayments
This is not to worry or scare you, but the right preparation is needed to get ready for taking on credit and ensuring you succeed across the board.
So How Do I Leverage Credit In The Best Way?
Once you have gone through the decision making process and selected the correct partner for your credit needs, you need to switch your thoughts to the best way to use and manage the funds properly.
Below are some initial benefits of taking advantage of credit:
- Helps to pay supplier orders or invoices and not hold up your supply chain
- Aids in managing cash flow with ‘buy now, pay later’
- Gives you a backup source of funds for a rainy day
- Helps you to plan with a guaranteed source of funds for things like bills, expenses and monthly outgoings
Finding a reliable, popular credit as seen with the amex gold card is pivotal. What you need to find is a reputable supplier. Maybe it is someone you have used before? How about asking a colleague or acquaintance for their recommendation? Ask yourself these questions and go from there.
Set yourself up for success by:
- Establishing your monthly repayment date and ensuring you have the cash ready for the direct debit or manual payment to be done
- Understanding what benefits come with using your credit card such as rewards and loyalty points
- Setting out a clear plan in terms of the duration of your repayment contract and when you could potentially make early repayments and save money on prolonged interest
- Laying out exactly what the credit will be used for and precisely how it will lead to increased sales or revenue
- Incorporating it into your business plan and forecasting
- Making all relevant people aware of the credit which is in place such as fellow Directors or investors
A great idea would be making a physical note of all the key information surrounding your credit. Print out the contract, file it somewhere. If you store all your key documents online somewhere like Google Drive, make sure they are saved and are easily accessible, so you never incur late fees or get to a position where it causes an issue to your business in general.
Using credit to boost and catapult your business forward can have a huge effect on cash flow, sales and general positivity. As long as you do your research and understand how to use and manage the credit effectively, then it could be right for you.