How to Start a Business with No Credit


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Much of the email I receive is from good people who have ended up in a bad place. They’ve lost their job, have an upside down mortgage, are facing death-grip medical expenses, or some other catastrophe has whirled their life into a tailspin. In the process, their credit has been trashed, they’ve had to use savings to meet basic expenses, and they want to start a business because they need income and they believe the marketplace will pay for goods or services they can deliver. 

As a person who has bootstrapped a few businesses of my own and been an executive in several others, I am happy to tell you it can be done and it happens – successfully – every day. In this ongoing economic downturn, with exceptional people losing their jobs, your financial survival may depend on starting a clever business.

Focus on your talents – what you’re good at and love to do. Starting and sustaining a business requires much hard work. You must love what you do to keep your attitude positive during the tough times.

I am an admirer of Paula Deen, the popular cooking show host. Most people don’t know that Paula started out divorced with two young sons to feed. She had a high school education combined with no income or marketable skills. The one thing she could do was cook. She started what has grown into a cottage empire by making sandwiches and selling them to Savannah businesses. Dear Paula, who most would have written off as a young divorcee doomed to a lower class life, merged her effervescent personality with the one thing she was good at and loved to do. She took lots of small steps, hit some snags along the way, and learned what was required to succeed in business as she moved from venture to venture.

Produce income fast. 

There is a successful custom cabinetmaking company in the Southeast. It was started by a young man, who offered to rebuild his parents’ kitchen. Their house was older and not level so the job provided many challenges. And his dad was a perfectionist. That added pressure to produce excellent work. He built a beautiful new kitchen, which he photographed and showed prospective clients. Although he started with no capital, his business grew rapidly.

In most new businesses, there are creative ways to produce income fast. When I did corporate consulting, I requested Net 10 payment terms, explaining that I was a small business and needed to be paid on a more rapid schedule than large companies. Most clients understand and many are hiring you because you are a small business.

After you have a signed contract to deliver a product or service, a friend or relative who believes in your abilities, may be willing to make a loan against the contract if you need resources to meet basic expenses until you get paid.

Become known as an expert.

Speak before every civic group and organization that will have you. Write a column. Local papers and networking sites are often looking for expert talent. However, don’t write or speak about your business. No one wants a sales pitch. If you’re a tile installer and an expert on tile and stone, people would like to learn what makes one floor or counter surface better than another in different environments. Write up a simple hand-out with summary points of the information in your presentation. Pass it out with your business card stapled to it when you speak. You’ll generate far more inquiries than you would from a sales pitch. The key is to speak or write about issues an audience cares about, while demonstrating your knowledge. People like to hire experts.

Go where you’re needed most.

This may seem basic, but when I was a market leadership consultant I was continually surprised by how many companies did not factor in customer need, when prioritizing market penetration. Analyze your potential customer base. Who needs you most? Go there first. You’ve got enough challenges starting a business. Try to simplify your path to producing sales, happy customers, and referrals.

Build your business credit.

At the beginning of the year, I wrote a 4-part series: You Can Build Awesome Business Credit. While some of the companies mentioned in those columns have changed their credit terms, most of the information remains accurate. And the business credit-building principles (separate from personal credit) have not changed. When your personal credit has been damaged, it’s critical for you to take the necessary steps to establish business credit as quickly as possible.

You can start a business with no credit. It will simply require a bit more patience, flexibility and creativity.