Corporate Risk Analysis

Entrepreneurs often rely upon their personal credit to start a new business. Sometimes that's a necessary step, although it's also extremely risky.

You can't, however, build a successful business entirely on personal credit. Instead, you need to establish and build a separate business credit profile. Think of it as taking the training wheels off your new business - it's a big step, but you'll go a lot faster and further in the long run.

Let's look at five steps you can take to start building your business credit profile today:

1. Get a DUNS Number. Dun & Bradstreet issues these numbers, which are the most widely used method of identifying businesses in the United States. Most corporate credit applications require a DUNS number - and it's up to you to get a number for your new business.

2. Consider a corporation or LLC. It's not impossible to get business credit as a sole proprietorship, but it's much more difficult to separate your personal and business credit.

3. Pay attention to the details. Prepare financial statements and a business plan, both of which are important to getting business credit. Also stay current with business licenses, permits, and other regulatory requirements - companies often check these details when they perform a corporate credit analysis.

4. Look for sources of "starter" credit. Some companies will grant credit without checking your personal credit history. But remember: This is only useful if the company reports your good payment history to the business credit bureaus, helping you to establish a solid credit profile.

5. Don't pay on time - pay early! Paying ahead of time can improve your business credit score even more than paying on time. It can also convince a business to extend credit or offer more liberal payment terms.

Once you start to build a business credit profile, don't forget to check your credit reports with all of the major reporting agencies. Errors and omissions could affect your credit risk score, so it's important to monitor your credit profile.

By Paul R. Lloyd

What do you do when your customer base disappears and your sales fall through the floor?

Root Causes

Begin by identifying root causes and performing a thorough competitive analysis of industry trends and changes. Find out where the market is going and why you are not keeping customers. Is your market shrinking due to changes in the industry? Or something the competition is doing? Have they introduced a more competitive solution? Have you reduced quality or customer service? Have you increased prices? Or have you kept prices stable while competition has lowered their prices?

Studying the root causes involves taking a hard look at your organization, processes, pricing, and products. What, if anything has changed in the way you sell your products and services?  Talk to your customers. Why are they not buying from you? Products and services have a life cycle. Eventually something comes along to render your best work obsolete.

Revisit your niche and value proposition

Study the niche you serve. Is it still viable? Is the pool of possible customers large enough to support your business? Or has the market shrunk? Be careful with your niche. The tendency is to expand it to reach a wider range of customers.

Most of the time you are better served by narrowing your niche. It’s counter-intuitive, but it usually produces the best result. The more you narrow your niche, the sharper your focus becomes. With a clear, focused message, customers find they can make a quick choice to either select you or move on to someone else.

Confusion is the biggest enemy of effective marketing. With a narrow focus, you minimize the risk of confusing your customers. Confused customers tend to go away, especially if they are visiting your website.

Deliver on your value proposition

How are you doing on delivering what you sell? Check your quality. Test your customer service response. Compare your prices with your competition. Are you promising something you can’t deliver?

Your marketing materials may be implying something that isn’t true. So check your promotional copy for accuracy. Check it again for any implied promises that you are not delivering on. For example, are you unwittingly practicing bait-and-switch tactics with your special offers? What you consider an upsell from a special offer may appear as a rip off to your customers.

In the heat of the competitive bid process, you may make or imply promises that you have no way of delivering on. Make sure your customer has a clear understanding of what they have purchased.

Re-brand and redefine your market

Brands can grow stale, especially in light of bad press, underperformance or other negative issues. Your company has a brand. You can revitalize it through a new corporate image program and marketing campaign. Give your customers a new way of seeing you. Change their focus from your traditional value proposition to a focus on new or different benefits. How are you cheaper, better, or faster than you were before? Emphasize these improvements in your new branding along with the benefits the customer will receive.

Markets change so make sure you are changing with them. Take a hard look at your target market. Describe them in writing. Does your description point you in new directions or suggest prospective customers you may have been overlooking? Who are your customers selling to? And what does that tell you about your customers?

Who are your competitors selling to? Have they found marketplace opportunities in industries you may have overlooked?

Has the industry changed in ways you may have missed? Look at what customers are saying about the way they do business as reported in the trade publications and websites serving their industry.

Are you effectively using online marketing and social networking? The trend for online buying is well established. Business has moved onto the Internet. If you haven’t taken online marketing seriously or if you have been ignoring social networking, you may be losing customers to the new way to do business.

Review these issues to see where you can make changes to better serve your customers. Reach your customers the way they want to be reached – online – or risk losing them.

Often the issue of vanishing customers is a question involving every aspect of your business, not just marketing and sales. It’s a symptom that it’s time to revisit your basic mission and strategy. Instead of being the death knell for your business, it could be the energizing force for leading you in new directions, new opportunities and new revenue streams.

Paul Lloyd is the founder of Zuk-Lloyd Associates, a marketing firm that delivers solutions, develops strategic initiatives and implements them with a flair for the creative. He can be reached at paul@zuklloyd.com