For the most part, starting a business is easy. Growing a business can be hard, because scaling up requires you to take risks. As a general rule, the bigger you want to grow, the greater the risk involved.
Traversing the landscape of partnerships, joint ventures, mergers and acquisitions could be compared to walking a tightrope; make the wrong decision, and you can lose money, your business or, in the worst-case-scenario, your house and assets.
We all know the key to good mission planning is doing some homework. Forecasting and mitigating risks require the same preparation, research and intelligence-gathering skills that many veterans have learned running ops down range.
Here are a few things to keep in mind while planning for growth.
1. Keep Your Business Credit File Updated and on Track
For many veteran business owners, the opportunity for growth may come in the form of landing a contract with a large corporation or with the government. When these organizations are deciding which company to award a contract, they may take into consideration an applicant's business credit report (i.e., through Dun & Bradstreet).
This may be in addition to checking to make sure the company is indeed veteran-owned and reviewing any other required documentation. Checking business credit scores and ratings may help those making contracting decisions act with confidence about the potential supplier's stability and discipline to fulfill the contract. It's wise to build and monitor your business credit file, so you're aware of any changes to your scores and ratings that may affect your relationships with vendors or your ability to win future contracts.
Another step toward growth may be securing outside funding. Some use an influx of cash to fulfill existing orders, cover capital expenditures or address a range of other needs that may contribute to growth. Many traditional lenders may access an applicant's business credit report as part of the approval process.
A strong business credit file may also help a business negotiate better terms and conditions, not only with lenders, but also with other vendors or landlords when looking to expand or get in a new physical space. Building your business credit file before applying for a loan may help you get approved with better interest rates and repayment terms.
2. Choose Your Partners Wisely (with the Help of Information)
Frequently, the more a company grows, the more it may interact with and rely on other partners and organizations. Two examples of these types of relationships include company's suppliers and clients. As a veteran business owner, you'll want to work with the most reliable vendors and customers.
When you rely on other companies to deliver a product or service, you should choose these partners wisely, and checking potential vendors' business credit files can help you do this. Beyond making sure they have the goods you need and are a company that's easy to do business with, you might also want to consider their financial stability. If a potential or existing supplier has poor business credit scores and ratings, they might be at risk for closure or non-delivery.
When partnering with new clients, it can be important to know about their payment history and check their business credit report to help assess their financial health. There are different strategic considerations to keep in mind if you are waiting 90 days for a payment as opposed to 30 days.
3. Get Informed About the People and Organizations You Are Approaching
When forming a new business relationship, it can be beneficial to research the company. Getting the basic information, such as strategic goals and company history, to the more nuanced, like the professional backgrounds of key individuals, may help you plan for the type of meeting you want to have, as well as help ensure that you are prepared for a range of conversations.
There are tools and services that can help you view key information on businesses and the people who work for them. You can use these tools before meeting with a supply-chain leader to see specific ways your business may help more than others. You only get one shot at a first impression, and research may be one of the best ways to make the most of that opportunity.
Running and growing a business will never be free of risk, but with the right data, you can be prepared for and help predict some of the most costly risks to your business. By building your business credit, you can help your company appear credible and reliable to lenders and potential business partners.
By monitoring other companies' credit files, you can help foresee the possibility of future late payments, closures or bankruptcies. With the right tools, you can get the key business and employee information you need to prepare for meetings with prospects and supply-chain leaders.
Take advantage of the opportunities you have to grow, but don't forget to take advantage of the tools available to help you minimize risk and grow safely.
Amber Colley is a business credit expert with Dun & Bradstreet who brings 20 years of experience working with businesses of all sizes to help them grow and prosper.
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