I like to think that there are two types of entrepreneurs – a horse and a cheetah. Both are beautiful and bold animals but they approach the entrepreneur life very differently. The first type of entrepreneur – the horse, can run as fast as 45 miles per hour, but often prefers to glide at a slow and steady pace. The second type of entrepreneur, — the cheetah moves almost as fast as the speed of lighting! That’s the biggest difference between these types of entrepreneurs, one wants to grow at the speed of Twitter and Instagram – the other, at the speed of Coca-Cola.
The Reason Why It Matters
According to the INC Magazine article, “Are You a Tortoise or a Hare Entrepreneur (It Matters” by Ami Kassar, building a business quickly may mean sacrificing your work/life balance. Entrepreneurs in the tortoise (aka horse) category are more likely to build lifestyle businesses that grow slow and steadily. This steady growth enables the entrepreneur to have more leisure time to focus on their own life outside of work. Entrepreneurs in the hare (aka cheetah) category are more likely to build high tech businesses that immediately attract revenue producing interest from customers and investors. In addition, hares have to keep investors happy so valuations can continue to rise, which can be time consuming and stressful.
There’s No Such Thing an Overnight Success
There may be millions of entrepreneurs who desire to make millions during the first few years of operations. However, that’s not realistic. Most small business owners are actually hares and horses and grow their business over time. Companies that grow quickly typically have better access to capital. These companies often obtain funds from angel investors and venture capitalists. Capital from these sources can be hard to come by. Hare and horse businesses will have to look to more accessible, traditional and alternative small business lending sources for capital, which can also be difficult to crack.
How to Crack the Code
If you’re a small business owner in need of capital, the best way to crack the code on small business lending is to educate yourself on the importance of several things:
- Building and Preserving Your Personal Credit History – establishing a personal credit history where you have diversified credit accounts, that are always paid on time is the key to qualifying for capital with traditional banks and lenders. When starting your first business, lenders will check your personal credit history to determine your creditworthiness and ability to borrow. If they find that you have late or inconsistent payments and a number of derogatory and delinquent accounts, you’ll ruin your chances of being able to obtain capital through them.
- Building and Preserving Your Business Credit History – Did you know that, according to Creditera, more than 45 million business credit reports were pulled from Dun & Bradstreet and 35 million from Equifax Commercial in the first part 2013? That’s right, business credit is becoming more and more important in lenders determining whether or not a borrower is creditworthy. Sure, you may only need your personal credit to get approved when first starting out, but over time you are going to want to build a business credit history because it will be combined with your personal credit to determine your overall creditworthiness (see LiquidCredit). The lower the score, the more likely you are to get denied (especially for SBA 7a loans).
Seek Expert Help
Seeking expert help to learn how to build your personal and business credit can benefit you in the long run. A knowledgeable and experienced expert will be able to teach you how to build a good personal and business credit history and help you put it into action. The best experts are often FICO Certified Professionals that at least understand the in’s and out’s of personal credit and can help you build your personal and business credit so you’ll always have a better chance at qualifying for traditional financing as your business continues to grow.