If you own and operate a startup company of any size or are about to launch one, use commonsense guidelines to avoid trouble and time-consuming hassles. Entrepreneurs should be diligent about controlling their tax situation and taking care of all state, local, and federal operating fees before doing anything else. Be careful about cosigning on student loans or other kinds of obligations that could impact your credit scores.
Focus on developing a professional network from day one. Devote time to the effort on a regular basis. Being totally honest with investors is a necessity, and you’ll need to aim to build a commercial credit rating as quickly as possible. Here are more details about those warnings and suggestions.
Stop & Think Before Cosigning on a Loan
Pause before agreeing to cosign on a college loan for a friend, relative, or anyone else. While it’s tempting to agree to help someone in need, especially when their future is at stake, ask yourself how does cosigning a student loan affect your credit? Remember that as a cosigner, you are equally responsible for the debt. So, if the primary borrower defaults, the lender can come to you for payment. As a startup owner, that means they could potentially seek compensation from your personal or business assets and bank accounts.
Further, even a few late payments by the main borrower will show up on your credit report as well. That kind of activity could negatively impact your scores and future ability to borrow for a car or home purchase. If someone puts you on the spot and asks you to cosign a college loan, tell them you want time to think about it. Review the main points about being a cosigner and let them know your answer the next day. If you choose to decline, explain the reasons for the decision so they’ll be more apt to understand the situation.
Be Honest with Potential Investors
It’s easy to get into legal trouble by making promises to prospective investors. It’s one thing to tout your new company’s strong points but be very careful when speaking with those who are thinking about investing in the startup. If they lose money and can make a valid claim that you misled them, then they could seek financial compensation for all their losses. Worse, you could face criminal charges for fraudulent business practices.
Networking Creates Customers
There’s no way to avoid the need to build an extensive professional network. This principle is particularly true for startup entrepreneurs. If you ignore this relatively straightforward step, then the customer base will grow very slowly or not at all. Instead, owners who dedicate themselves to networking discover that it’s much easier to acquire new clients as time passes. What are the core elements of a healthy network effort?
In addition to joining mainstream organizations like the local Chamber of Commerce and industry groups, make connections with at least one charitable organization, a church, grassroots politicians from both major parties, and youth sports teams that need sponsors. The good news is that creating a useful network is not difficult, but it does take time. Plan to start seeing results within about one year.
