It is important to get good credit and maintain it in your business. It brings you opportunities that are not available to people with little or no credit.
Many years ago we were looking for a way to deal with the seasonal swings in business volume without annual hiring and firing cycles. We finally decided that we would keep a key group of skilled people on the payroll year round and fill in with good subcontractors in our busiest times. It has worked out well for us.
One carpentry subcontractor we used on occasion was also a remodeling contractor; but did not seem to be able to keep a consistent flow of work going so he would subcontract to us when things worked out between us.
The first time his crew came on a job they were in this big, beautiful Ford F-550 stake body truck. It looked brand new. They had loads of bright shiny new DeWalt tools. On top of that, the owner drove a brand new high-end BMW.
My first impression was that this man must be pretty successful or is riding a wave of debt. This was something we never did. We bought used and paid cash for everything including our vehicles.
It turned out that this man could not make payroll each Friday unless he got a check from us first. He did business at the same lumber yard that we did and, according to the owner, they were nursing him along.
In short, he had buried himself because he paid himself first; bought brand new “toys” on impulse; and gave what was left to his creditors. This never works. Eventually you are going to run into one more hurdle and not be able to climb over it because you have not built up the credit and capital to carry yourself along.
Your customer does not care if your truck is 5 years old so long as it does not look like it lost in “Demolition Derby.” There are lots of ways to get tools inexpensively. If you only have use for certain tools on occasion, rent them.
Build up your credit and cash reserves. Once you have good credit with your suppliers you will be treated differently and better because they will know that they can trust you to pay them within terms.
I will cover this in more detail in our newsletter.
