The Real Reasons Suppliers Really Matter

Businesses have partnerships and relationships across the industry. Without customers and client, the company isn’t going to be successful. Probably the most important connection is with your suppliers. The reason is obvious, right? They provide you with the resources you need to keep up with demand. Without the right materials, the business would fall flat and have to close its doors. It’s about keeping the supply line open to fulfill company orders.

As true as this may be, it’s not the only reason suppliers matter. Below are four more factors which put them at the top of the food chain.

Risk Prevention

There are a whole host of risks which come with dealing with suppliers. The fact that some don’t keep their promises is one of the biggest ones. Yep, certain organizations will take the money and promise the world yet come up with the goods later. Also, there are unforeseen circumstances and regulatory compliance to factor in too. In short, the wrong supplier can impact the company’s efficiency which can harm output. A quality partner is a firm which understands the risks and has backup plans from A through to Z and beyond. You need a supplier that is accountable and proactive to be successful.

Cost-Cutting

Slashing the business’ expenses is an unavoidable thing. Whether you are in the red or the black, it’s the only thing you will think of for months. The unlucky ones have to focus on cutting costs for years. Suppliers hold power in the palm of their hands. A deal can be expensive if the firm needs packaging for fireworks or other hazardous materials. The majority of companies will charge a pretty penny, and it’s money you can’t afford to waste. The good news is most are open to negotiation. If you promise to buy a big shipment or use them for the long-term, they will reduce the price per unit. Also, being punctual takes away from the return and overhead costs.

Brand Association

People never used to care from where their products came as long as they arrived. Today, the culture is entirely different as green packaging and helping the planet matter to customers. In fact, this is true to the point that they will choose a business with the same ideals. To secure their custom, you have to prove your dedication to the cause, which isn’t too difficult. However, a bad supplier can ruin everything. If they are notorious for harming the planet, this reflects on your brand. Inevitably, customers will bounce.

Small World

The world seems huge yet there are only six degrees of separation between people. In business, it feels as if it isn’t as much as six. Everyone has contacts and aren’t afraid to use them to their advantage. Sadly, spiteful people will communicate with their “friends” to tarnish your reputation. As petty as it sounds, it has happened a million times before due to a bad relationship. Although tensions rise, you should be careful about bad mouthing a partner as they may do the same to their peers.

Can you see the importance of your suppliers now?

 

4 Money Mistakes Every Business Owner Makes

Being your own boss can be exhilarating, until the moment you realize it can all go horribly wrong at a moment’s notice.  Maybe this is because you haven’t managed your money, or maybe it is because you haven’t protected your family in the case that something happens to you.  Either way, money mistakes can come back to cause significant sorrow for business owners – especially if they are ignored.

Why does this happen?  For many business owners, they are too caught up with just trying to keep the lights on to even think about long-term planning.  For others, it is a false sense that things will always stay the same.  The reality is the downturns and accidents happen and if you haven’t prepared yourself and your family then you are doing both a disservice.

With that in mind, here are four money mistakes every business owner makes.

Mistake 1: No Insurance

While this might seem like an added expense, the reality is that when managed correctly, insurance is an excellent way to manage risks.  The key is to manage the cost of your premiums with the coverage you are getting.  Doing so help you maximize your coverage levels while minimizing how susceptible you and your business are risks.

Policies you should consider for your business include general liability insurance and ‘key man’ insurance.  The latter will cover the company and maybe your family in case of anything were to happen to you.  This is important as most small businesses rely so onheavily on the owner that it would be almost impossible to continue operating if something happened to them.

Another way this can help is that it will provide added security for your family as the insurance payout can help to cover some of the uncertainties that will pop up if you are no longer in the picture.  Not to be morose but this is something that all small business owners should think of, but few rarely do.

Mistake 2: No Budget

Let’s face it, money can go out the door much faster than it comes in the door.  Even when times are good it can feel like you are bleeding cash and for this reason, you need to set up a budget to help manage your business.

It doesn’t matter if your revenue and expenses are ‘predictable’ or not, the key is to start tracking your revenue sources and your expenses and then see how the two are related.  Not only will this help you to better manage your costs, it will help you to identify the relationship between your revenues and the expenses required to deliver to your customers.

Another benefit of having a budget in place is that it can help to improve how you do your pricing.  Gone are the days of picking a number out of thin air as you replace your pricing with data.

Mistake 3: Not Preparing for Emergencies

Just as with your personal finances, you need to prepare your business for emergencies as well.  This could be a sharp change in the economy or in your local market, a personal injury claim, or even a motorcycle accident while you are enjoying some free time.  In the case of the latter, you might want to reach out to a lawyer who specializes in such claims, such as https://westcoasttriallawyers.com/practices/motorcycle-accidents/.

But even if a lawyer helps you, the question should be whether you have helped your business?  The answer to this starts by being prepared for emergencies.  As mentioned, having insurance can help but it is not the only answer.

What can you do?  It starts by making sure your business is on the firm financial footing and then setting aside some of your profits for a rainy day.  Beyond this, you also want to establish a relationship with your bank as the reality is that it is very hard to get credit when you need it, so you are better off getting it in place when times are good.

Mistake 4: Failing to Reinvest

There was a time when the steel industry in the U.S. ruled the world. However, boards of these major corporations failed to reinvest at a time when their foreign competitors had no choice but to build new mills.  Fast forward 50 years and the domestic steel industry is a shadow of what it once was.

The lesson here is that you either reinvest in your business or you die.  Sure, you might not be running a steel mill worth hundreds of millions of dollars, but this is something you should take to heart for your business.

This is not to say that you need to keep pouring money into your company without a return.  Instead, invest in those priorities which will help your company grow.  Doing so will help to make sure your business is on a strong footing for the future.

 

Advice on How to Build Business Credit with Low Personal Credit Score

If you are confused about building business credit, don’t worry. You are not the only one. Many entrepreneurs and business owners are not aware of the major distinctions between a business and personal credit.

Business and personal credit contains various information, so they are not always correlated. Yet, if you are a sole proprietor, lenders will probably reference your personal credit to ensure that you are able to manage debt.

Before giving business credit, lenders often evaluate your personal credit. If people sign a personal guarantee when opening a business card or borrowing money through a business loan, their personal credit will probably be checked. Such a guarantee assures that you are the one to be liable for debts. Better avoid such situations in order not to risk your personal assets.

In certain cases, these two credit kinds may be related. When growing your business, you can take measures to separate them.

It Will Take Time to Build Credit

Even if you are not going to tap a line of credit or take out a loan, building business credit can be useful for you. It can influence your office lease agreements, insurance premiums, cooperation with other companies, and vendors’ terms.

The good news is that you can take measures to build business credit despite the low personal credit that typically allows you to get a secured personal loan only. After having established a solid business credit, you may get financing without a personal guarantee. The measures to take are:

  • Incorporating your business;
  • looking for errors in credit reports;
  • establishing trade lines;
  • making timely repayments;
  • working on personal credit.

1. Establish and Incorporate Your Business

Before making a credit report for you business, the credit bureaus should be aware of it.

To build credit, you may take the following steps:

  • Form an LLC or incorporate your business. It will separate your business entity from personal identity.
  • Open saving and checking business accounts. Ensure that every business banking account has your legal business name.

2. Look for Errors in Credit Reports

Business credit reporting agencies collect data from different sources. A business credit report may include:

  • the contact information of your company;
  • an overview of the industry, number of employees, key personnel, branches and subsidiaries, years and business and sales.

 3. Establish Trade Lines

Trade lines can be important because your business credit reports can contain a lot of information.

Business trade lines are credit lines that are established between a vendor and a business. For instance, an office supply company can let the business pay the account balance a couple of days or weeks after getting the equipment.

Be aware that credit reporting agencies will know about your payment activity from your vendors. Even if you make timely repayments, it doesn’t mean you build your credit.

4. Make Timely Repayments

Your business credit score is largely affected but your payment history with lenders, vendors, and credit card issuers. Making timely payments is important for both business and personal accounts.

If you delayed in just a couple of days, late payments will have a bad influence on your business credit report.

5. Continue Improving your Personal Credit

Let’s admit that it is slightly confusing to understand the difference between these two credit types.

Business and personal credit reports rely upon various data and cannot be 100% identical.

On the other hand, business credit scores often rely on blended information that integrates the personal credit of the business owner.

It is a good idea to look at your personal credit if you are just starting out or a sole proprietor. If you are in need of a loan and your personal credit is still low, you can try the Personal Money Service bad credit loans option to find the most appropriate solution.

Bottom Line

Your personal credit can go down because of some reasons, but don’t let it hurt your business.

Begin building your business credit right now to have it established when needed. Even if you’re not going to take out a loan, remember that business is an unpredictable thing.