Any successful small business venture is going to need a very quality and well written business plan. If you do not have a solid Small Business Plan
in place they you are setting yourself and your business up for failure. When you are starting your own business you not only want to find something that you love you want to be able to fill a niche product that is going to help make your business stand out from the crowd.

There are many great places on the web that can help you write out a nice and solid business plan. If you are not sure if you can write a suitable plan there is always the choice of hiring a professional writing service to take care of it for you. Think of your business plan as the corner store of building a successful business. Without nice solid blocks to start building from you are at the risk of having a business that fails.

When you are starting you own business in the midst of difficult economic times you need to be sure that you are offering an in demand product or service. If you are offering something that potential clients are going to need to buy then they are going to spend their money no matter what. Even if your {small|}home business offers a more luxury item many people will buy because they can order it online and have it delivered to their house. That will end up saving them time and money.

Your business web site will be your calling card when potential clients visit your site. You want your business website to grab people’s attention while at the same time be very simple to navigate through. If clients can’t find what they are working for quickly they will move along to another website.

Top notch customer is another key to building a successful home business in the midst of difficult economic times. If you treat your customers the way that you would want to be treated then they are going to want to return time after time. Going the extra mile to provide your customers with the best possible shopping experience will help your home business thrive no matter how the economy is currently doing.

First there are 5 things that are factored into the algorithm used to calculate credit.  They are:

• Payment history      
• Amounts owed        
• Length of credit history
• New credit
• Type of credit used

Your payment history is obviously critical to your overall score.  Late payments on most anything will damage your score as much as 100 points per instance.  Making a vehicle or mortgage payment late is a cardinal sin.

The amounts you owe are the second most important part of your credit make up.  For real purposes your ratio can include up to three mortgages and two car payments without suffering negative effects.  It is the revolving debt where most consumers get into trouble.  Revolving debt is basically any credit card debt or furniture store, gas cards etc.  I counsel consumers daily that have credit scores in the low 600’s.  “But we’ve always made our payments on time” is the biggest single statement I hear.  Yeah, but………………Any time you have a revolving account and you’ve used over 30% of the available credit, your score will suffer.  Any time you exceed 50% your score is going south in a hurry!  One instance is bad but if you have five credit cards and they are all maxed out, YOU GOT TROUBLE!!!!  The obvious answer is to stay below the limits and never ever buy something like furniture or a tv using their in house financing.  You are automatically reported to the bureau’s as maxed out.  Use your Mastercard or Visa to make those purchases and stay under the limit! 

The next item used in determining your credit score is length of credit history.  Yes, lenders want to see stability and nothing demonstrates that more than someone who has been extended credit and used it wisely for a long period of time.  And on that note, if you have credit accounts that have been open for years but you haven’t used them in a long time, DON’T CLOSE THEM, simply to have a clean credit report.  LEAVE THEM OPEN!!!  Your score will suffer if you close them. 

Next we have new credit.  Applying for credit has become routine in this country.  The average person has over ten inquiries on their report at any given time.  If you need credit, apply for it.  But do it sparingly.  Lenders will look at the amount of new credit you’ve been granted (in the last two years) and really scrutinize you.  They want to know why and for what.  Their major concern is you overextending yourself.  Further, numerous inquiries can be looked upon negatively.  The average inquiry knocks two points off your score and is there for 18 months to 2 years.  Too many recent inquiries tells a lender you are shopping desperately for credit and believe me, they’ll run for the hills.

And finally the last item that makes up your credit score is the type of credit used or your “mix”.  Ideally, you want one house payment, one vehicle payment, 2-4 bank cards with balances below 30% of available credit.  Yet you can get away with subsequent mortgages and vehicle payments to a point. 

So now you know the absolute facts when it comes to a FICO score formula.  The next biggest statement made to me on a daily basis is “thats not reality”.  And its right.  In todays tough financial climate people are subsidizing income with credit cards, they are robbing Peter to pay Paul when it comes to their mortgages and vehicle payments.  The case can be made both ways as to “who’s fault it is”.  But at the end of the day, fault is irrelevant.  What do you do to get out of it and what do you do to fix it.

First, getting out of it is really quite simple.  Change your spending habits!!!  Your personal affairs are a “business”.  A business goes bankrupt if the income doesn’t cover the expenses.  As far as fixing it goes, there are many credit restoration companies out there.  Beware, the industry is full of charletans.  If you need to use a credit repair service, make sure you interview them thoroughly.  Ask for references.  And you shouldn’t have to pay alot of money “up front”.  Pay on performance.

Darrell Hornbacher

Darrell is a nationally known Finance/Credit expert, author and speaker.  Additionally, he is the founder of Midas Financial, The Small Business Credit Alliance and co-founder of www.thesmallbizcollege.com.  To get more in depth information on this and thousands of other topics relating to business, credit and finance, join www.thesmallbizcollege.com.

30% of your personal credit score is made up of how much of your credit has been utilized.  Of particular importance to a lender is the percentage of your revolving you have used.  When that number exceeds 30% your scores can suffer.  When that number exceeds 50% your scores can plummet.  Sometimes by as much as 50 points for a single occurance. 

Over 60% of the banks that offer HELOC’S report them on your credit bureau report as “revolving” credit.  Thats right.  HELOC balances are reported just like credit card balances.   If you take out a Home Equity LIne of Credit and max it out, be prepared for the consequences!  If this is your only business financing option what do you do?  There’s a couple things.  Obviously the easiest is to keep your balance below 30% of available credit.  You might also want to ask your lender as you interview them, how they report to the bureaus.  As revolving or as “real estate” related.  Don’t be afraid to visit several lenders til you find the product you want.  The third option would be to take out an actual “second” mortgage.  Seconds are always reported as real estate related. 

There are many different ways to obtain business financing.  Information like this is all stored at www.thesmallbizcollege.com, helping you make intelligent and educated decisions on all business related matters.

1. Create a Business Plan

When it comes to business plans, they are the plotline that makes the story work. In order to write a tight, effective story, you need to have a plot to follow. It’s a roadmap that gets you from point A and to point B. It’s the glue that holds the pieces together. Wanting to run a business is not enough. When you look at the big picture, you can see the umbrella business, but it’s the details that make the engine go. A business plan handles the details and gives you the freedom to pursue a plan to get results. In five years, one year or 10 years, you should have a clear idea of where you are going to be.

2. Keep notes and records of your business transactions

When you have a plan, there are the day to day transactions that happen between you and the world at large. These can be financial transactions, business contacts, meetings and interactions in the form of correspondence, email and calls. All of these need to be tracked so that when it’s time to look back and reconcile things, you have at your fingertips everything you need to work through the process.

3. Invest In Professional Help

Before you get the secretary or administrative assistant, get a professional accountant onboard to help you maintain your financial books. Smart business people always hire professionals who have more knowledge in a particular area than themselves. An accountant will give you advice as your setup and get started and lead you through the ocean of details that only a professional can know. When your business is up and running, you will have in place a person who can advise you in all financial matters so that you are successful.

4. Time management is your best friend.

Starting a new business takes time and commitment. Always make sure that you budget your time as wisely as your money and at least twice as miserly. Money can always be borrowed, time cannot. If you want to do anything other than business related things (like sleep), you should make valuable use of your time by planning, scheduling, and prioritizing.

5. Build a Contact List

Having the right contacts can make or break a business. As you attend meetings and gather information, meet with other likeminded business people, exchange business cards and network to see what types of businesses are out there. You might need printing or some other type of service. Always be on the look out for contacts that can help you in your business and people who might be able to use your business. Networking is a valuable part of the business model and building a good contact list is essential to success.

6. Researching Your Products and Services

If you are a small business, you need to know everything about your industry and what it means to get ahead in it. You could easily get eaten alive going it alone and unprotected in open water. Remember that the more information you have, the better you will be able to meet the needs of the people who are looking to you for service. Know what the competition is, what the market is like, who your customers are. Learning everything upfront will prevent avoidable business mistakes.

Make sure that you know exactly what you are getting into and the only way this can be accomplished is through looking into every aspect of your business. Running a small business is as trying as it is rewarding. This investment is of time, energy, and money. Remember to remain knowledgeable and proactive and you will already be ahead.