For most small business owners, the relationships they build with their vendors and suppliers are the backbone of their very existence, providing them with the goods or services they need to be able to function on a day-to-day basis. Understanding how you can actually manage those relationships to help build your business credit is key to a successful future for your small business, especially if the addition of a single supplier can positively impact your potential.
Are you maintaining a positive relationship with a variety of business creditors?
Jack owns a small auto repair shop. It has been his bread and butter for several years and, while the work is hard and the profits lean, he takes comfort in knowing his business supports his family comfortably. He buys his parts from a specific distributor, shop rags, gloves, and cleaners come from another supplier, and his solvents and degreaser are purchased from a third. No matter how slow business is, he always makes sure his invoices are paid on time.
Lately he has been getting lots of offers from other suppliers hoping to win his business, but since he is happy with the ones he uses, the offers hit the trash can as soon as they come in. What Jack doesn’t realize is that those offers represent an effective means to business credit building, simply by spreading his purchases over a variety of providers.
Linda and her husband Tom have been maintaining a property management business for a little over two years. Their highest expenses revolve around the maintenance sector of their company – things like fuel, equipment, and labor. Tom maintains a good relationship with the vendor where they purchase their equipment, but the supplier recently stopped carrying the specific brand they usually buy. Eventually, parts to maintain their equipment were harder to pick up locally. Linda ordered replacement parts online from a different supplier using a prepaid account.
Shortly after her second order, she began receiving offers for a gas card that had denied them credit just a couple months earlier. Tom and Linda had no idea the online parts store had an affiliate relationship with the fuel card provider. By adding a new parts supplier to their existing prepaid accounts they were able to expand their credit-building to another segment of their regular expenses.
In addition to his regular day job, Sammy has a home-based real estate investment company. He buys foreclosed or distressed properties, makes a few necessary upgrades or improvements, and then sells the properties for a modest profit. He usually pays for the materials out of pocket, paying cash or using his personal credit cards for his purchases. He worked out an arrangement with a local carpet supplier who provides the materials on a discounted basis if he hires their laborers to do the installation, but he has to pay the invoice within 10 days of the work being completed.