Hyderabad, India (PressExposure) August 13, 2009 -- It is shocking that nearly all small-businesses fail in their first months or years of business. One of the primary flaws of the way people run their businesses is being lax when it comes to book keeping and cash flows. It is important for business owners to follow some simple but imperative steps in order to go maintain the success of your business.
One major flaw for new business owners is that they often do not have enough capital, or cash. This is caused by an underestimate of expenses and an overestimation of revenue. Make sure that you do not run out of capital by being conservative with your revenue and expense estimates. It may mean the difference between success and failure for your business.
Another important aspect of your business is attaining forms of business credit, like a business credit card or loan. It is difficult for business owners to understand what is completely necessary to get these types of loans. Quite often, business owners are not given an explanation to their rejection for business credit accounts, and therefore cannot fix the problems they've encountered.
One important thing that business owners should do to help ensure their success in credit application is become incorporated. It is a dire mistake for business owners to establish a sole proprietorship. One of these is because you are personally liable for anything that happens with the company. If your company gets sued, your company isn't the only thing at stake - so is your home, your car, your personal accounts, and every other asset you own. Small business owners should never start sole proprietorships. They also experience taxation policies that are not helpful. If you are registered as a corporation, then you are going to get better credit and will be more successful financing your business. Incorporating your business makes it separates it from you as a legal entity.
In addition, small business owners who open sole proprietorships will use their personal credit accounts to finance their business. But doing this only deepens debt and further puts your business at risk from suffering from poor credit. Instead, incorporating your business allows business owners to attain business credit lines and avoid this dilemma. Incorporating your business actually gives you access to more capital and will improve your chances of success.
Business owners should also consider LLCs, or limited liability corporations. These offer the benefits of a corporation without the downfalls of a corporation. In addition, they protect individuals from having their personal assets taken from them if they are sued or if their company is sued.
It is important for business owners to take these steps in order to maximize their chance of credit acceptance and to maximize their capital. This is one of the surest ways to ensure business success. It is important for business owners to establish good credit and to have the right kind of business so that they can be approved for funding that will increase capital and allow for expansion and growth.
Scott Letourneau is the CEO of Fast Business Credit, Inc. and has a valuable free guide to help small business owners survive their first year of business! Go to our fast business credit page for powerful details!