Building Business Credit To Simplify A Franchise Purchase
Business credit is a major indicator of how financially healthy and reliable your business is and can help you to qualify for loans and other forms of financing. Without good business credit, your company may struggle to find loans, apply for credit cards, establish relationships with vendors and succeed as a small business.
Recognized as a Franchise 500® by Entrepreneur Magazine, Pet Wants provides a business ownership opportunity for those who love pets and want to make a difference in their communities by educating them on healthy pet food. With two distinct business models and low start-up costs beginning at less than $60,000, Pet Wants provide business ownership opportunities that fit into a variety of budgets. Your business credit history, however, will play a role regardless of which ownership model you choose.
Your business credit score is also important because it gives you the ability to separate your personal and business finances. Small business owners often invest a lot of their personal assets and savings into their business. Part of building your business, however, is slowly separating your personal financial commitments from your business financial commitments.
Regardless of the structure of your business, building credit starts with getting your business properly established and opening bank, credit card, and vendor accounts. And, of course, paying your bills on time is critical to building and maintaining good business credit.
So, let’s look at ways to build your business credit:
Legally Establish Your Business - First, you will need to establish your business by choosing a legal structure and registering it with the state. From there, it is essential to create a legal name and set up a business phone number, which will give your company added credibility with vendors and the government. Once the basic legal aspects of your company are created, you can begin opening accounts with vendors that report to the credit bureaus to establish your business credit file and start building credit.
When investing in a Pet Wants franchise, along with an established name, you’re buying the background and reputation of the business, as well as their relationships with vendors, media contacts, and more. In addition, the built-in support that comes with franchise ownership can help with things like site selection, product supply, training, marketing plans, and funding.
Get An EIN - Your employer identification number (EIN), is like your business's Social Security number and is what the government uses to identify your business. Your EIN is also a major piece of information for paying business taxes throughout the year. By requesting this number once your business is registered, you're gaining a corporate ID number that you will use to file taxes, open a business bank account and apply for business licenses.
Open a Bank Account - Using dedicated business banking and credit accounts is essential for personal asset protection. When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued.
Additionally, by building your business credit you are able to acquire credit cards and other financing options in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Utilize a Business Credit Card - Opening, using, and paying off business credit cards is another way to build business credit. Research which credit card is best for your business, as some cards may offer rewards that can be advantageous for certain types of businesses. Keep in mind that, especially if you've just started your business, your credit limit may be rather low when you start out. As you build your credit score, your credit limit will increase.
Pay Your Bills On Time - The simplest yet most effective way to build your business credit is to pay your bills on time. By paying your bills in full and on time, you're proving that you can make good on your debts. If you pay bills early, however, you may be able to build your business credit score even faster.
Maximize Your Credit Utilization - An important aspect of building a credit score is credit utilization. Much like with personal credit cards, business credit cards have a recommended usage so you can maximize your credit score. It's recommended that business owners use no more than 30% of their total credit limit, which demonstrates to lenders that you're not only financially responsible but more than able to meet your minimum balance each month.
These tactics to build and maintain an excellent credit rating are valuable for a path to business or franchise ownership. If you’re considering starting a business from the ground up or researching franchise opportunities available in your area and you’re a pet lover, Pet Wants may be the ideal match for you. With no liquid capital requirement, Pet Wants makes the dream of business ownership accessible to a wide range of entrepreneurs.
When you are ready to own your own business, Pet Wants can help you be up and running your own franchise in just a few months. Our franchise director will walk you through our streamlined process to ownership, answering all of your questions and helping you determine the best financing options that will assist you in meeting your goals and become a Pet Wants franchise owner.