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5 Things To Consider Before Using Credit Cards To Finance Your Business

5 Things To Consider Before Using Credit Cards To Finance Your Business

Credit cards are convenient and can be valuable for a business which needs a temporary infusion of cash. The Federal Reserve observes that in 2009, 83% of small businesses used credit cards, with 41% using personal cards. Despite this massive use of credit cards, small business credit cards only account for a small portion of small business debt, as most business owners have the sense to pay back their credit card every month.

However, there is more to using a credit card for your business beyond “pay the credit card back at the end of the month.” Here are 5 tips which any business should know about credit cards before you just decide to use your MasterCard to buy office supplies.

1. Know the difference between personal and business credit cards

There is nothing wrong with using a personal credit card to handle business expenses, but you may want to get a business credit card instead.

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Business credit cards have some key advantages if you are a small but expanding business. You can have copies of the same business credit card, which will let you and your subordinates make purchases on their own. Paying off business credit cards also improves your business credit, which will make it easier to get loans on better terms. On the other hand, business credit cards lack the consumer protections of personal credit cards.

If you want a more detailed list of the differences between a business and personal credit card, NerdWallet has an excellent article on the subject and which one may be right for you. At minimum, do your research on which one your business should go with.

2. Look for the best rewards plan

Don’t just go with the first credit card plan that looks alright. Many business and personal credit cards offer unique rewards which will be well-suited for your particular business. For example, if you or your workers have to travel a lot, then a card which offers airline or hotel perks would be ideal. If you drive a lot, then gas rewards would be great.

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Also compare monthly fees, interest rates, and what the payment plans are. If you are worried about credit card fraud, you should also see what protection plans are offered.

3. Never mix up personal and business expenses

Even if you decide to stick with a personal credit card, you should never use the same credit card to buy office supplies and groceries.

The big reason is for bookkeeping purposes. When it is time to pay back your credit card at the end of the month, it can be tricky to figure out what goes under business expenses and what does not (if you mix them up on the same card). By keeping separate cards, you can know exactly how much your business spent without needing to go over every single item.

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Furthermore, if you go with a business credit card, using the business credit card for personal finance shows a lack of seriousness about your business. Keep business to business, and your personal expenses personal.

4. Be careful with who has your business credit card

As noted above, one of the advantages of a business credit card is that you can make multiple copies and hand them to your employees. If you have an employee who makes large purchases, giving him a company credit card means that he can pay for business expenses without having to front his own money and wait for a reimbursement.

Obviously, you should not just hand those credit cards out. Business credit cards should only go to employees who regularly make big or important purchases for the company, or for those who are away from the office.

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It’s important to trust and verify. If an employee uses his business credit card for personal expenses, your business will be held liable. While you can obviously fire him, abusing a company credit card is not a criminal offense.

5. Use your credit card as little as possible

Credit cards can be useful as an emergency cash resource, and can help track your expenses. However, there are risks to becoming dependent on them.

A small business will always have funding options. Talk to investors, ask your friends and family for funds, and tap into personal accounts. Even a bank loan’s interest rates will normally be lower compared to a business credit card.

Conclusion

Credit cards have value for some of the reasons noted above. Plus, spending a certain amount and paying it back every month can improve your business credit rating. Remember, if you use it too heavily, or if your business suddenly hits a downturn, then you can find yourself facing mounting high-interest debt, which will destroy your business. Try to avoid using it for big purchases unless you have no other option.

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Last Updated on July 16, 2019

7 Powerful Habits To Win In Office Politics

7 Powerful Habits To Win In Office Politics

Office politics – a taboo word for some people. It’s a pervasive thing at the workplace.

In its simplest form, workplace politics is simply about the differences between people at work; differences in opinions, conflicts of interests are often manifested as office politics. It all goes down to human communications and relationships.

There is no need to be afraid of office politics. Top performers are those who have mastered the art of winning in office politics. Below are 7 good habits to help you win at the workplace:

1. Be Aware You Have a Choice

The most common reactions to politics at work are either fight or flight. It’s normal human reaction for survival in the wild, back in the prehistoric days when we were still hunter-gatherers.

Sure, the office is a modern jungle, but it takes more than just instinctive reactions to win in office politics. Instinctive fight reactions will only cause more resistance to whatever you are trying to achieve; while instinctive flight reactions only label you as a pushover that people can easily take for granted. Neither options are appealing for healthy career growth.

Winning requires you to consciously choose your reactions to the situation. Recognize that no matter how bad the circumstances, you have a choice in choosing how you feel and react. So how do you choose? This bring us to the next point…

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2. Know What You Are Trying to Achieve

When conflicts happen, it’s very easy to be sucked into tunnel-vision and focus on immediate differences. That’s a self-defeating approach. Chances are, you’ll only invite more resistance by focusing on differences in people’s positions or opinions.

The way to mitigate this without looking like you’re fighting to emerge as a winner in this conflict is to focus on the business objectives. In the light of what’s best for the business, discuss the pros and cons of each option. Eventually, everyone wants the business to be successful; if the business don’t win, then nobody in the organization wins.

It’s much easier for one to eat the humble pie and back off when they realize the chosen approach is best for the business.

By learning to steer the discussion in this direction, you will learn to disengage from petty differences and position yourself as someone who is interested in getting things done. Your boss will also come to appreciate you as someone who is mature, strategic and can be entrusted with bigger responsibilities.

3. Focus on Your Circle of Influence

At work, there are often issues which we have very little control over. It’s not uncommon to find corporate policies, client demands or boss mandates which affects your personal interests.

Gossiping and complaining are common responses to these events that we cannot control. But think about it, other than that short term emotional outlet, what tangible results do gossiping really accomplish? In most instances, none.

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Instead of feeling victimized and angry about the situation, focus on the things that you can do to influence the situation — your circle of influence. This is a very empowering technique to overcome the feeling of helplessness. It removes the victimized feeling and also allows others to see you as someone who knows how to operate within given constraints.

You may not be able to change or decide on the eventual outcome but, you can walk away knowing that you have done the best within the given circumstances.

Constraints are all around in the workplace; with this approach, your boss will also come to appreciate you as someone who is understanding and positive.

4. Don’t Take Sides

In office politics, it is possible to find yourself stuck in between two power figures who are at odds with each other. You find yourself being thrown around while they try to outwit each other and defend their own position; all at the expense of you getting the job done. You can’t get them to agree on a common decision for a project, and neither of them want to take ownership of issues; they’re too afraid they’ll get stabbed in the back for any mishaps.

In cases like this, focus on the business objectives and don’t take side with either of them – even if you like one better than the other. Place them on a common communication platform and ensure open communications among all parties, so that no one can claim “I didn’t say that”.

By not taking sides, you’ll help to direct conflict resolution in an objective manner. You’ll also build trust with both parties. That’ll help to keep the engagements constructive and focus on business objectives.

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5. Don’t Get Personal

In office politics, you’ll get angry with people. It happens. There will be times when you feel the urge to give that person a piece of your mind and teach him a lesson. Don’t.

People tend to remember moments when they were humiliated or insulted. Even if you win this argument and get to feel really good about it for now, you’ll pay the price later when you need help from this person. What goes around comes around, especially at the workplace.

To win in the office, you’ll want to build a network of allies which you can tap into. The last thing you want during a crisis or an opportunity is to have someone screw you up because they harbor ill-intentions towards you – all because you’d enjoyed a brief moment of emotional outburst at their expense.

Another reason to hold back your temper is your career advancement. Increasingly, organizations are using 360 degree reviews to promote someone. Even if you are a star performer, your boss will have to fight a political uphill battle if other managers or peers see you as someone who is difficult to work with. The last thing you’ll want is to make it difficult for your boss to champion you for a promotion.

6. Seek to Understand, Before Being Understood

The reason people feel unjustified is because they felt misunderstood. Instinctively, we are more interested in getting the others to understand us than to understand them first. Top people managers and business leaders have learned to suppress this urge.

Surprisingly, seeking to understand is a very disarming technique. Once the other party feels that you understand where he/she is coming from, they will feel less defensive and be open to understand you in return. This sets the stage for open communications to arrive at a solution that both parties can accept.

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Trying to arrive at a solution without first having this understanding is very difficult – there’s little trust and too much second-guessing.

7. Think Win-Win

As mentioned upfront, political conflicts happen because of conflicting interests. Perhaps due to our schooling, we are taught that to win, someone else needs to lose. Conversely, we are afraid to let someone else win, because it implies losing for us.

In business and work, that doesn’t have to be the case.

Learn to think in terms of “how can we both win out of this situation?” This requires that you first understand the other party’s perspective and what’s in it for him.

Next, understand what’s in it for you. Strive to seek out a resolution that is acceptable and beneficial to both parties. Doing this will ensure that everyone truly commit to the agreed resolution and will not pay only lip-service to it.

People simply don’t like to lose. You may get away with win-lose tactics once or twice but very soon, you’ll find yourself without allies in the workplace.

Thinking win-win is an enduring strategy that builds allies and help you win in the long term.

Featured photo credit: Unsplash via unsplash.com

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