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The Process of Ensuring Business Credit Approval The most important thing for a business owner is to keep their business going. You want to be successful, you want your business to keep growing, and you'd like to branch out if you can. All of these things, though, are just pipe dreams until your business is running smoothly and making money. Unfortunately, too many companies try to run before they can walk, and this was never clearer than around the turn of the century when the dot-com business boom quickly turned into a dot-com business bust. People who got rich quickly thought they were invincible, but they found out they weren't when other companies came along, stole their ideas and customers, and kept making money. The dot-com bust taught us that being successful and thinking you are successful are two different things. Some people think success doesn't take as much work as it does. You need to know a lot about business and study things in depth. Before you can run a business successfully, you need more than just an idea and a dream. There are many facts you need to know. If you don't know these things, it's easy to look at your early successes and think you're a natural, that running a business is easy, and that you'll be a millionaire before you know it. One of these facts is that every business's financial decision needs to be backed by sound financial planning. As a business owner, you will mostly need sources of credit that can be called on to give you the money you need at critical times if you want to do big business ventures. This will help you grow your business and take advantage of market gaps, times of high demand, and other business opportunities. Some lending institutions are willing to back what they see as a winner, but getting them to see your business as a winner takes work. So, take action on what you have learned in this course and build up your business credit to make potential lenders think well of your business. This won't happen overnight, but it is achievable. Even though loans are not usually handled the same way as credit cards, paying them off early, in total, can still help your credit score. Getting a monthly payment off your list of expenses is helpful, even if there are other reasons. The same is valid for paying off mortgages early and ensuring that your bank account is always black. Credit from banks and other lending institutions is not the only kind of credit that can be called "business credit." At the beginning of your business, credit lines from local suppliers are helpful. If you intelligently use these profit lines, you will not only keep your credit line open, but you will also show the companies that gave you credit that you can be trusted. This will make them more likely to give you more credit when needed. One way of thinking about credit is that it should only be given to people who can show they don't need it. This is true, but it is more accurate to say that credit is given to people who can pay it back when asked to. Here's what you have to show. If you have a history of paying back what you borrow and can show that you are a responsible borrower, you have a much better chance of getting credit in the future. Before someone starts a business, it only exists as an idea in their head. Between when it's just an idea and when it's a full-fledged, working business, there's a lot of thinking, organizing, and just plain hard work that needs to be done. It's not enough to say, "I'm going to start a business selling hats," and then start selling them the next day. If you want your business to do well, you must follow all the steps highlighted in the previous module of this course. If you haven't been running a business for a long time and need more money to pay for the whole thing yourself, you will need to get money to start a business. You will need to show potential investors why they should put money into you to get this money. In this case, your business plan will be your ticket into the business world. Even the most interested investor will only put money into your business if you have a good or complete business plan because they can see that it is very likely to fail. On the other hand, a perfect business plan can make the difference between getting funding or not and getting good funding or just essential funding. When you look at it this way, it's easy to see why making a good business plan is so important. A business plan might be the most important thing you do for your business. It might look like just some words and numbers on paper, but it's a lot more than that. It shows a possible investor how well you understand how business works and if you have what it takes to run a successful business. The business plan will explain your idea for a business, what you hope and expect from it, and what you know about money. It will tell a possible investor what you would do in a particular situation, how much money you think you could make from a particular stream, and how well you can solve problems. These are just a few examples of what a business plan needs to say. A good business plan will be a detailed document showing you have put a lot of thought into making your business successful. To make sure people take your business plan seriously, it needs to cover at least the following: - Cover Page; - Table of Contents; - Executive Summary; - Market Research; - Business Structure; - Objectives and Plans; - Financial Plans. You can add more to your business plan, depending on your business and what you want to get out of it. But if it has the things above and remembers how important it is to be realistic and optimistic, it could be the key to the success of your business. You must ensure your plan is elaborate and touches all aspects of your business. If it's too short, no one will take it seriously, and it won't have the correct information. If it's shorter, it will look like you can't figure out what's most important.