Endless Solutions Inc – Susan R. Davis

Even though you are a business, your personal credit reports and scores have a role to play in your business success. Managing your credit reports and scores is crucial to keeping your costs reasonable for your business.

Why Your Credit Report and Score is Critical

If you are a sole proprietorship, as many entrepreneurs start out, any loans you need or credit relationships with vendors you apply for will involve an analysis of your credit-worthiness. You are an unknown quantity to them, and so they look to your credit reports and score for information.

What Lenders and Vendors Look At

Your credit report has a lot to say about your personal habits in managing money. Creditors – banks and vendors – are looking to see if you are going to be reliable in your cash management. They want to see if you will repay on time – and consistently. If you are planning on a personal equity line of credit, equity loan, or refinance on your home to finance operations or growth, or even purchasing real estate for your business operations, good personal credit is crucial.

They are specifically looking at:

• Whether or not you have over-extended yourself. Do you have too much credit available? Are you possibly planning to run balances up to keep your business afloat with an influx of quick cash?
• Are your credit card and loan balances close to your maximum credit allowed? Having high balances on your cards, or large loans, can indicate that you are relying on credit for cash flow (both personally and for business), which makes lenders and vendors nervous about being yet another creditor hoping for payback.
• Do you pay on time? If you have a string of 30, 60, or 90 day late records on your credit accounts? Being able to pay on time according to credit terms is a big deal to your creditors. It shows that you are not good at managing your cash flow and maintaining a proper budget. They don’t want to extend credit and be left holding the bag on your debts.
• Do you have a bankruptcy or collection agencies on your credit reports? These are both very bad signs for a potential creditor to see. They are usually indicators that you don’t know how to manage your money. And if you can’t manage your personal finances, why should they think you can handle business finances (which are usually much larger sums)?
• And lastly, are your creditors closing accounts on you? Proactive creditors, fearing that one of the above issues might prevent them from getting their money out of you, may close your account to further charging, which is a big indicator to other creditors that even your current creditors don’t trust you to pay back your debts. It may seem like a small thing, but it’s bad news on your credit report. Better for you to close the account first.

All of the above things are critical to being approved for loans, bank lines of credit, and vendor lines of credit, especially for sole proprietorship companies. But I’m sure you’re wondering about how your personal credit reports and scores can affect you if your business is a partnership or corporation.

It affects you far more than you might think. Any business without a strong and lengthy track record may require personal guarantees from owners and/or officers to obtain credit. This is especially true if you are applying for a larger line of credit. If it is outside of your company’s usual level of financing, creditors will want to see proof that they’ll get their money back somehow. Even if it is out of your personal hide. They may or may not require a formal agreement where your personal funds back up the line of credit, but they’ll certainly want to know that you have the resources and ability to step in to help the business if necessary.

So What’s the Bottom Line?

You need to keep a close eye on your credit reports and scores. Something as simple as a mistake by a creditor, or as complex as identity theft, can really mess up your personal credit. You need to regularly check your reports with the three major credit bureaus and fix anything that is wrong. And if you are a business owner with assets to protect, you need to take extra care to avoid identity theft.

And it’s not just about your business. You need to protect your family in this time of financial upheaval. If your business pays your family’s bills, then keeping your credit clean is all about protecting your family as well. Don’t let somebody else’s mistakes or a malicious thief ruin your ability to provide for yourself and your family.

How to Monitor Your Credit Reports

There are basically two ways to go about this – paid and free.

You can obtain one copy of your credit report each year from the three bureaus at AnnualCreditReport.com. However, you have to pay for the credit scores separately. Also, as a business, you don’t really want to wait a year between reports. If something goes wrong, you need to catch it before then. Quarterly monitoring is probably the minimum you should consider.

Your second option, and I highly recommend this as a necessary business expense, is to either obtain your credit reports once a quarter by paying each credit bureau for them, or (and even more useful) to have your credit monitored on a regular basis by a credit monitoring agency.

Benefits of Credit Monitoring

The expense is usually quite minimal, but it includes several benefits:

1. You can get copies of your credit reports when you need them. If you are concerned about a possible sudden change in your credit, you can check when you need to without the additional cost of doing it at the credit bureau.
2. You get constant identity theft and credit monitoring. If something negative comes across the board, such as somebody applying for credit in your name, changing contact information in your reports, or other sudden changes, you’ll be notified immediately so you can take action.
3. You can watch for potential reporting errors much easier. Creditors do sometimes make mistakes in reporting your payment history, or over-limit charges, or other mistakes. You can watch carefully, at no extra cost, to make sure these are corrected before your credit score suffers.

I highly recommend that you keep a close watch on your credit these days. Identity theft is up, credit reporting mistakes are up (sometimes creditors report other people’s problems on your reports), and you never know when some stupid collections agency will post a bad mark on your record for not responding to them when they’ve actually been interacting with someone else about their debts.

If nothing else, it’s good for your peace of mind to know what the credit bureaus are reporting. If you can’t afford monthly monitoring over time, at least take advantage of a monitoring agency’s services for a short while, just to ensure that all is well with your credit. I’ve personally done the free route before, and with all of the individual sign-ups, paying each bureau for scores, etc., letting the monitoring folks do it for you is so much easier. As a business person, I’m sure you understand – like I do – how much your time is really worth.

What do you think about credit reports and credit monitoring? Any good stories to share with either route?

Tags: credit bureau, credit lines, credit report, credit score, creditors, identity theft, loans, vendors

You can harness your mind for creativity and dramatically increase your ability to succeed.

The key to harnessing your mind is to utilize it at times when you have often allowed it to wander unproductively. Those times are powerful moments for your conscious and unconscious minds to work together on solving a problem.

What do I mean? Think about it like this. How many times have you driven down the road, or been a passenger in a car, and you are just staring out at the scenery as it flows by, with no conscious thoughts in your mind? You might go 10 or 15 minutes – or more – without even being aware of what is going on inside or outside of the car.

These are creativity moments – if you can train your brain to use them.

Create a Picture of the Problem

Instead of allowing your mind to just wander aimlessly, give it something to crank on. Picture a problem you are working on and define it in as much detail as you can mentally. Don’t focus on what you’ve done to solve it, or tried to do. Just create a strong mental picture of the issue at hand.

Harness Your Mind

Now harness your mind for the creativity boost. Allow yourself to free associate various issues surrounding the problem. Don’t try to control the process. Just let your mind wander, gently pushing it back towards the problem if you wander off course. If your mind jumps on something that you haven’t considered before, try to relax and gradually allow that thought to come to the forefront.

You need to treat these ideas with care and gentleness. If you grasp too tightly, it will squirt out of your brain and run away. Just ease towards it like you are reaching for a butterfly – slowly, gently, carefully. And embrace the idea.

Building Your Ideas

Now comes the fun part. Build that idea into its own deep thought. Focus on it and again allow your mind to wander, savoring the idea, exploring it fully. But never pushing too hard.

If you have another aha! moment, start the process again. See if you can begin to build a tapestry of these ideas, finding interconnection points, trying to slide pieces together into a bigger picture. If something doesn’t fit, bring it to the forefront of your mind as a “problem issue” and apply your creative mind to it. Does it start to fit? Or is it too far outside the box?

Your mind is a powerful instrument, and you should harness its creative power and put it to work. Any time you are doing something that doesn’t require serious thought – driving, walking, cleaning house, washing dishes, taking a shower – you can shift your focus to something that needs your attention.

Thoughts, ideas, problems. Anything that needs gentle guidance to escape the trap of a boxed-in mind. Creativity is all about thinking outside the box and seeing patterns in seemingly unrelated things. Harness your mind and apply it to these issues, and you’ll have a powerful outside-the-box thinking and problem-solving tool.

Tags: creativity, harness your mind, Productivity, think outside the box

Developing an entrepreneurial spirit is a key element in starting and running a successful business. Without this key, you may be a businessperson, but you are just as likely to be trapped into working in your business rather than working on your business.

What Defines An Entrepreneurial Spirit?

To define an entrepreneurial spirit, you have to look carefully at the guiding characteristics behind this mindset. Many people are business leaders, managers, and officers in a company. What makes an entrepreneur different?

• Entrepreneurs are long-term strategists. Many business owners and company executives get caught up in the short-term. You work so hard on meeting your present goals that you fail to look to the future. You miss the “big picture.”
• Being an entrepreneur means taking risks. If you define your goals for your company by existing systems, goals, and criteria, you fail to look beyond the immediate necessity to the areas you need to adapt in to survive. If you can’t change in response to outside factors, even if it means moving beyond your comfort zone (strategically, monetarily, or in your processes and systems), then you will fail to adapt, and that eventually leads to the stagnation and death of your organization.
• Creativity is a mainstay of entrepreneurs. Thinking outside the box, as it were, goes hand in hand with strategies and risks. Your creativity will help create the opportunities for change that can lead to positive adaptation. Reinventing yourself and your business on a regular basis leads to long-term health.
• Learning from your mistakes, and the mistakes of others, is critical to success. They say that those who fail to learn from the past are doomed to repeat its mistakes in the future. Being a student of history – business history, world history, and the history of leaders – helps you to gain the knowledge of and perspective on decisions made over the years, decades, and centuries of leaders before you. History may not have called them entrepreneurs, but exceptional leaders usually have many similar characteristics. And they make mistakes, too. Learn from them.
• Entrepreneurs cultivate the ability to manage people and organize systems. A key element to success as a leaders is the ability to manage others, help them to learn, set them free to excel, and delegate to them. Develop systems that help them to leverage your knowledge and expertise. You don’t want to create clones of yourself, with all of your faults. You want to tap into their talents and harness the multiplying effect of teamwork.

Now you may be thinking at this point that these points don’t apply to you because you are a one-man or small business. Teams can be built outside the employee relationship. In fact, your teams may be more professional and personally-accountable that way.

So, I suppose you are wondering now if you are an entrepreneur. How do you measure up?

Am I an Entrepreneur?

Here are some questions you can ask yourself. Considering the points above, think about yourself on these topics:

1. Are you detail-oriented or a “big picture” person? When confronted with a problem, do you focus on the immediate issue, or do you consider the long-term issues involved?
2. Do you get extremely nervous when investing or utilizing larger-than-usual sums of money in your business, even when you know it can fund growth? Do you worry a lot when you contemplate a change to your “tried-and-true” systems that you use in your business?
3. Do you have a hard time with creativity or do you feel you are good at thinking up new ideas and ways of approaching things? Do you find it hard to break out of your normal way of doing things to consider the new and unusual? When you’re trying to be creative, do you feel like you’re going round and round and getting nowhere?
4. Are you stubborn? Are you willing to take the advice of others, even if you don’t consider them an expert? Do you spend a regular amount of time each day/week/month/year learning new things and researching how people before you tackled problems? Even if the problems are different, the methods and ideas often spur solutions.
5. Do you have trouble dealing with people effectively? Do you have trouble delegating? Do you know how to monitor, mentor, and manage a process without having to do it all yourself? Are you good at designing efficient ways of doing things?

These questions are some of the things you can ask yourself to evaluate your potential as an entrepreneur. Maybe you’re right up there on it. Maybe you’re not. The key is improvement, and there is always room for it, even at the top. Adapt or die.

Are there other elements of being an entrepreneur that you consider important? We’d love to hear from you in a comment below.

Tags: Business Growth, Entrepreneur, Leadership