We often get involved in our clients' practices far beyond postcards and business cards. In a recent discussion with a client, I found several mistakes this experienced business owner was making that affected his financial profile. I thought I would share a few of those I see most often.

First, too many business owners close old accounts. Naturally, if you're no longer using a trade account, you think of closing it. However, the way bureaus score credit worthiness includes both the total amount of available credit and also the age of your credit lines. That means more available credit is a good thing, and older available credit is a good thing. Don't close an account just because you have a new one.

Second, don't accept the personal guarantee requirement at face value, and as your business grows, challenge this request with frequency. If you're just starting your business, you're probably going to have to personally guarantee everything. (I always recommend asking for an alternative however, and I find that about half the time the guarantee request is either dropped altogether or an alternative is offered, such as a deposit). However, as your business grows and develops a free-standing credit history, you should not have to provide the guarantee. This is the case with everything from cell phone providers to the largest commercial loans. Make sure you check the fine print, and suggest to your prospective lender that based on your company's history, the personal guarantee should no longer be necessary.

Third, ask up front whether your personal information is required for an approval. Many times it is not-companies routinely collect far more information than necessary. You'll be surprised how often your corporate tax ID number and company information will suffice, especially if your business is more than two years old.

Finally, don't delay establishing business credit. Like your personal credit file, it takes time and work to develop a strong profile. Most entrepreneurs I work with take the easy road, and rely upon their personal histories for borrowing money long after it is necessary for corporate survival. There are several reasons to pursue my strategy; first, the sooner your business can demonstrate a healthy financial picture, the better for the valuation of the business, its survival, and your own financial well-being. Secondly, your personal financial picture could change overnight if you were hit with a divorce, lawsuit or major medical expense. If your business remains dependent upon your personal financial picture, it could find its growth stunted, or worse. There's no reason to expose your business to this unnecessary risk.

Business credit is a vital part of growing your business or even just protecting it from market or competitive forces. Drop us an email if you have a question!