It’s never easy to start a business, but it is especially hard when you lack resources or a great credit score. But does that mean you have to give up your dream? The experts say no; you just have to work a little smarter.
How to start a business with bad credit
We are barely out of the recession, and some believe we are still in it. But one thing we can all agree on is how it affected individual credit scores. Many business owners who once had stellar credit are just beginning to dig themselves out, so their resources are few. Interestingly, these are the same small business owners that are needed to help jump start the economy.
Regardless of your personal credit situation, the inspiration to start a business is still there – in fact, many entrepreneurs will tell you they entered the business world at a time when they had run out of options. There is no doubt starting and running a business is risky, but one thing should be clear; starting a business doesn’t need to be impossible. Business owners with bad credit and few resources launch new enterprises every day.
Four tips for starting your business:
What are the four most important things needed to start a business?
If you can’t afford to hire a marketing firm or lease a retail space, it might be hard to get a lender to give you the money you need. It is a simple matter of learning how to overcome obstacles.
1) Location:
Many property managers realize that new businesses have very limited resources, but they also know they have space that needs to be rented. As a result, many landlords are willing to make deals to ensure that all their empty spaces are occupied. Some landlords might provide a business owner the first month’s rent for free, and only take a small percentage of the business’s income for the first year. This gives the new business time to generate some revenue and ensures that the landlord will earn some rent as opposed to leaving the space vacant.
Another way to minimize the need for retail space is to start an online business. Many free resources exist for business owners who wish to create a website with ecommerce functionality. Or better yet, why not use a popular existing site like Amazon or eBay?
2) Customers:
This may sound a little obvious, but unless you have customers you really don’t have a business. However, some entrepreneurs are so concerned about opening their doors that they worry about a prospective customer base at the last minute. This is not such a wise strategy.
Making customers a priority and actually landing some before your doors open is a much better way to start a business. This doesn’t mean you need to do a lot of advertising either. There are many ways to use publicity, guerrilla marketing techniques, networking and word-of-mouth to get your message out.
Plus, with customers who are ready, willing and able to pay for your products or services, lenders are much more likely to fund your business. Using asset-based lending, businesses can secure working capital regardless of personal credit history. This working capital can be used to attract the next few customers and continue growing the business.
3) Marketing:
Of all the items a new business needs to get started, marketing piece is probably the most important. Sure, there are some pricey ways to advertise your business, but social media will get your message in front of potential customers quickly without breaking the bank.
Using free social media sites like Facebook, Twitter, LinkedIn and Google+ is a great way to drive customer interest and demand. Regardless of whether your business has all the money needed to get started, it would still have to use these media sites to build its customer list. Why not leverage these resources to your advantage from the get-go?
4) Employees:
Other than the obvious ways to attract employees without the high cost of recruitment, there are still plenty of good workers who will help you without pay. Consider hiring interns or independent contractors and offering them stock options or a small share of your company. Sometimes you can hire virtual assistants, web developers and writers through a freelance marketplace like oDesk.com.
In a competitive job market, some potential employees may be willing to forgo a paycheck in the beginning with the understanding that your business will make it up to them once the business takes off.
Starting a new business, in any economy, is a difficult enough task to begin with. If you have poor credit and little financial backing the difficulty can grow exponentially. However as the old saying goes, if there is a will there is always a way. Startup businesses don’t succeed because they have a lot of money; they succeed because the business owners got out there and went after it.