The Truth of Credit

photo by mytanny

Finding money to start a business is not an easy task, especially in this economy. Trying to fund an online business is even harder.  If I were to start calculating the money I have wasted on “Instant Internet Income” and “How to make money online” products, it would bring tears to my eyes. For most wanna-be entrepreneurs like myself, the most accessible and easiest way to get money is with a credit card.  But is that the best option?

When in the hands of the right person, a credit card can be a pretty handy tool. In fact, many smaller companies that have huge lines of credit will use them to increase monthly cash flow and defer payments for 45 days with the correct planning. However, you most likely won’t be able to do this, at least not right away. Here are some tips that I have dealt with from experience:

• Make Sure you are Committed – Blogs and websites are not huge capital expenditures. However, they all take time to make profitable. The more experienced you are, the quicker you’ll make money. Depending on the type of business or website, you should plan not to make any money for at least a year (which is still better then a lot of other brick and mortar businesses). This is purely speculation, maybe you’ll be the one to make me eat my words.

• Just the Necessities - Marketers call it the “buying frenzy”. When you’re hyped up about something, you want to purchase everything there is to do with it. Just do a Google search on “Search Engine Optimization”. You will find you could spend a small fortune on e-books or memberships. Don’t buy 5 when 1 will suffice.

• What Type of Credit Card? – Awhile ago when I was young and credit stupid, I signed up for an American Express card thinking it was like my other cards where I could pay just the minimum payment until my business grew. I quickly found out it was a charge card and the balance of $500 was due in 2 days. Moral of the story…know what type of business card you’re getting.

Using credit cards is never the best option, but if you’re like me you won’t be able to help yourself. A true entrepreneur at some point is going to have become comfortable with debt. How did you start your online business? Did you use a credit card or some savings?