On a lark, I Googled “Start a Business with Bad Credit”. To my surprise, 69 million results came up! Apparently, this is a popular subject as many people share the dream of being their own boss but the Great Recession has bruised many would be entrepreneur’s credit. Here are steps you can take to become a business owner.
The first thing to consider, treat what little capital you have as the most precious commodity. Treasure your “treasure” and only give it up begrudgingly. Don’t overspend on nonessential items. If your expenditure does not lead to an immediate sale, rethink your purchase. Your goal is to book a sale as quickly as possible. But be careful about extending credit. There is only one thing worse than no sales, that is selling your product or service and not getting paid.
Second, there is a great quantity of free (but valuable) advice. SCORE is a nonprofit association dedicated to helping US small businesses get off the ground, grow and achieve their goals through education and mentorship. They have been doing this for nearly fifty years. All their services are free. In Canada there the Canada Business Network which provides advice and technical assistance for Canadian entrepreneurs. Depending on the country you reside in, use one of the two links to make an appointment ASAP.
Third, if your business is B2B (Business to Business) or B2G (Business to Government) in nature there are funding alternatives available. For example, Invoice Factoring Companies look at the creditworthiness of your client. Many factors like start-up companies (including mine) and we will even pre-approve your client’s credit before your first sale. With a Factoring Company, you also receive a credit manager for free and your credit facility is only limited by your ability to generate sales to creditworthy clients. Your personal credit is not an issue unless you have an open bankruptcy, but even then a forward-thinking factor can even be part of the plan or discharge.
Fourth, if you are opening a retail or restaurant this is the riskiest venture. Failure rates are high and besides friends and family, your choices for funding are limited. however, if you can make it to the first six months you can get Merchant Cash Advances against your average credit card sales.