You've wanted to start your own business and be your own boss for as long as you can remember. It's enough to give you chills to think about making something from scratch and seeing it grow and thrive under your care. You've been preparing for years to be able to call yourself a business owner. You've taken classes. You've worked for businesses that are similar to the one you want to own. You've learned about population. You've asked for licences and permission to do things. You've been telling people for weeks about the grand opening. You have hired a group of people. You thought you were ready for anything, but now that you're looking at your monthly bank statement, you realise you forgot one small thing. You didn't know how much it was going to cost to get your business up and running.
When you look at the last number on the statement, you realise that your dream business is going to fail before you even open for business.
You can do a few things. You could try to borrow money from your parents. It might be a good idea if they have enough money. Most parents are willing to help, and if you get a little behind, they are less likely to shoot you in the kneecaps.
You could ask a bank for a loan. Even though this is an option, it's likely that you already have at least one big loan and have used up several other lines of credit. Another problem with this plan is that most banks are reluctant to lend money to new businesses. Who could be mad at them? About two out of every five new businesses fail within the first five years. Many of the owners of these failed businesses put most or all of their own money into the new business. When the business fails, they are forced to file for bankruptcy. These are loans that are risky for banks.
You could get a credit card for your business.
Why should a business want to get a credit card?
A business credit card can help a small business that is just getting started in many ways. There is a window of time. A small business owner might think twice about getting a credit card because of the interest rate, but most business credit cards have no interest for the first year. Since it's hard to start a business without taking on debt, most business credit cards let you move a balance from another account for as little as $5. This is a great way to get out of a loan with a high rate of interest. Most credit cards give their employees free cards to use. This makes it easier for the business owner to send employees out to buy small things like office supplies and meet with clients without having to deal with an expense account. Most of the time, getting and using a credit card is worth it just for the customer rewards. Many business credit cards come with travel bonuses that can be used to help pay for business costs. On all purchases, other cards offer a cash back bonus of 5%.
If you do a simple search on Google, you'll quickly be overwhelmed by the number of credit cards for businesses like yours. It's tempting to apply for the job with the biggest bonus and not read any further. This is not something you should do.
When choosing a business credit card, there are a few simple things to keep in mind.
A card comparison is the first thing you need to do to find the right card for your business. Find a website that lets you line up all the major credit cards and see all their features in one place. This will save you the trouble and time of having to talk to each company separately.
Check the interest rates, check them again, and check them again. You can find a credit card with an interest rate as low as 9% if you look hard enough. On the other hand, there are those that charge interest rates between 19 and 20%. When it comes to high-priced items, the extra 10% adds up quickly.
Find out about the annual costs. Companies often charge up to $150 a year just to use their card. This fee is often waived by companies, but only for the first year.
A credit card can help a small business pay for its start-up costs, which can be astronomically high. In some cases, a credit card can be more profitable than a bank loan.
