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How to Develop a Winning Digital Marketing Strategy in 4 Easy Steps

According to Smart Insights, 45 percent of companies don’t have a clearly defined digital marketing strategy; 17 percent of companies have a digital marketing strategy in place, but it’s separate from their marketing plan. 

This means 62 percent of companies are unprepared. 

They don’t have the strategy, tactics, or tools they need to market their business well. The bad news is that marketers waste 37 to 95 percent of their marketing budget. This is really common, but it doesn’t have to be; if you have the right digital marketing strategy in place, growing your business is easier. 

If you’re feeling unprepared, don’t worry. 

Today we’re going to cover the important ins and outs of creating a winning digital marketing strategy. 

Why You Need a Digital Marketing Strategy

Your digital marketing strategy gives your company direction. With a plan in place, you’ll have the details you need to help your company grow consistently. Your digital strategy document should: 

  1. Define your short and long term goals
  2. Show you who your customers are
  3. Show you where you can find them 
  4. Outline what you need to attract your customer’s attention
  5. Offer a step-by-step plan to attract and hold customer attention
  6. Show you how to analyze and improve marketing performance

Why go to all the trouble? 

Is it worth the time to create a strategy document? CoSchedule’s State of Marketing Strategy Report found winning marketers: 

  • Document their digital marketing strategy. Marketers who document are 538 percent more likely to achieve success than those who don’t.
  • Document their marketing processes. Those that do are 466 percent more likely to achieve success consistently over time than those who don’t.
  • Winning marketers set goals. Goal setters are 429 percent more likely to report success than those who don’t; 81 percent of these marketers achieve their goals; 10 percent of organized marketers always achieve their goals.
  • Winning marketers study their audience. These marketers are 242 percent more likely to conduct audience research four times a year. Almost 60 percent of the elite marketers featured in their study conduct audience research once or more per month.

It seems too good to be true, but it’s actually the reality.

The more time you spend thinking about your goals, getting to know your audience and planning how you’ll approach your digital marketing, the more likely you are to achieve success. 

What Should Be Included In Your Digital Marketing Strategy

I’ve already given you a sneak peek, did you catch it? 

To be successful, your digital marketing strategy should focus on four specific areas. 

  1. Setting goals, objectives, and key performance indicators (KPIs)
  2. Understanding and defining your audience 
  3. Creating and implementing your digital marketing strategy
  4. Auditing and improving your marketing campaigns 

You’ll want to break each of these areas down in enough detail so you (and your team) can work with each of these areas properly. With each of these areas, you should have a pretty clear idea about: 

  • The information, tools, and resources you’ll need to create a plan
  • Who will be responsible for creating your plan
  • Who will be responsible for implementing your plan
  • The KPIs and metrics you’ll use to measure the success (or failure) of your plan
  • The tools and resources you’ll need to implement and improve campaign performance

Each of these points needs to be defined clearly for the four steps areas above. 

Let’s take a closer look at these four areas and break things down a bit more clearly. 

1. Setting Goals, Objectives, and KPIs

This step is all about deciding what you want.. 

Planning your marketing strategy begins with setting quantitative and qualitative goals;  you’ll also want to set KPIs. These goals are sort of like the railroad tracks that keep your digital marketing strategy on the right track. 

What’s the difference between qualitative and quantitative goals?

G2 has a really helpful way of defining these, so I’m going to paraphrase their definition here. 

Quantitative goals can be counted, measured, or displayed using numbers. Goals like increasing monthly recurring revenue by 15 percent or boosting your conversion rate by 3 percent are good examples of quantitative goals.  Qualitative goals are abstract, descriptive, or conceptual — these goals are usually tied to the question “why.” Goals like increasing customer trust or improving brand reputation are examples of qualitative goals. They’re difficult to measure but just as important. 

You’ll want to make sure that your goals are: 

  • Challenging, realistic, and attainable
  • Tied to your company’s mission, vision, and values
  • Concise — 2-3 main goals 3-5 supporting goals
  • Specific, clear, and timely
  • Broken down into smaller, step-by-step milestones 

Your goals are important, but they’re difficult to achieve if you don’t have a step-by-step plan to follow. That’s where milestones come in; milestones are tactical. They’re great because you can use them to move towards your goals quickly. 

What about KPIs? 

Scoro has a list of 136 KPIs you can use to jumpstart your planning. I’ve listed a few of the more common examples you can use below.

  • Unique visitors per day/month
  • Pages per visit
  • New leads per day/month  
  • Marketing qualified leads (MQLs)
  • Conversion rates
  • Churn/attrition rate
  • Cost per conversion
  • Conversion rate per keyword
  • ROI per content
  • Click-through-rate on paid advertising

Focus is really important. 

It’ll be tough to focus on lots of metrics at once. Instead, you’ll want to focus your attention on a small number of really meaningful KPIs and metrics. 

Which ones are meaningful? 

They’re the KPIs that have the biggest impact on your company, the ones that generate consistent returns or a large amount of cash for your company. You’re looking for the 20 percent of KPIs and metrics that produce 80 percent of your results. 

That’s a pretty easy place to start. 

If you’re not sure which KPIs you should focus on, start with the common KPIs and metrics that have a direct impact on your business. These are typically metrics that focus on traffic, conversions, and optimization. 

2. Understanding and Defining Your Audience

You know what your goals and objectives are. Now you need to figure the same things out for your customer. This step requires some upfront research, but the success (or failure) of your digital marketing strategy starts here. 

Think about it. 

If you find the right customers, the people are excited to buy your product, then selling is a whole lot easier. It’s especially easier if you can understand what they want and how you can go about selling to them. So to do that, you’ll need information on your customer’s demographics and psychographics. 

What are you trying to figure out? 

  • The size of your market: You’ll want to figure out some important details about your market —is it new or established, niche or mainstream, broad or specialized. You’ll want to figure out who the major and minor players are, market expectations, areas you can disrupt, and the financial upside in your specific market. 
  • Who your customers are:  Are you targeting new moms, weekend warriors who are active on the weekends? You should have a basic idea of the customer you’re targeting. Are you focusing your attention on a specific niche, i.e., affluent travelers, price-conscious fashion aficionados? Use previous sales, competitor research, and market research sources like Ubersuggest and Google Trends to find the answer. 
  • Where they spend their time: Your customers have specific hangouts. Web developers spend their time on sites like ArsTechnica, Reddit, SitePoint, etc. New moms spend their time on sites like Babble, CafeMom, or Bundoo. If you know where your customers like to spend their time, you have a pretty good idea of the channels to target and the content to use. 
  • What they consume: This overlaps a little bit with where they spend their time. When there is an overlap, you’ll want to break the differences down even further. For example, your customers may spend a lot of time on Reddit, but this doesn’t tell you what they’re consuming on Reddit. Reddit is where they spend their time; the subreddit r/RobinHood is what they consume. See the difference? One tells you about their specific interests and desires; the other focuses on location. 
  • Why they buy: Your customers don’t buy for the same reasons. Sources like online reviews are a great way to get really helpful, in-depth feedback on why customers buy from customers themselves. You can also use tools like surveys or polls to attract responses. You’re not looking for an individual answer; you’re looking for trends. 
  • Where and how they buy: Do customers price shop offline, in your store, then order online from Amazon? Maybe your customers prefer a one-time purchase over recurring payment options? If you understand when and how your customers buy, you’ll be able to adjust your marketing around their expectations. Maybe that means persuading customers to do something different or stick with market expectations. 
  • What they need to buy: Online reviews are a helpful tool here as well. If you’re a new business, you can start with competitor reviews. Go through your competitor reviews, then make a list of the concerns brought up in each review. Look for customer objections, technology issues, complaints, reputation issues, any problem that customers felt were deal breakers. If you have reviews of your own, you can do the same thing there. 

Remember the research I shared earlier? 

Elite marketers study their audience, conducting audience research once or more per month. This step is important because it gives you the instructions you need to create a winning digital marketing strategy. Audience research shows you how to persuade your customers. 

This isn’t rocket science. 

But it requires more effort than most companies are willing to give. 

Here’s why. 

Most companies assume they already know their customers. They believe they know what their customers want and the best ways to approach them. 

They may be right. 

But the data they have on their customers changes often. Consistent research is the only way to stay on top of what your customers actually want. At this point, you’re ready for step three. 

3. Creating and implementing your digital marketing strategy

If you’ve done your homework, you should have the building blocks you need to create a well defined digital marketing strategy. You should be able to identify the marketing channels that will work best for your business. There are lots of digital marketing channels you can choose from. 

You can focus on: 

  • Content marketing
  • SEO
  • PPC
  • Display advertising
  • Email 
  • Online video
  • TV commercials
  • Mobile ads
  • Channel partnerships
  • Events 
  • Social media advertising 
  • Podcasts and radio advertising
  • Print advertising

In fact, there are more than 51 different marketing channels you can use to promote your business. Which one are you supposed to use? 

There are a few ways you can approach this. 

  1. Investing in the channels your customers use (e.g., search, social media) 
  2. Investing in the channels that give you independence and control (e.g., email, partnerships)
  3. Investing in the channels that are most common/popular (e.g., SEO, PPC, Social media) 

Start by testing the channels where there’s more overlap. 

If your customers use popular channels like Google search or Facebook, those are great places to start. If you’re looking for a channel that gives you maximum control and works well with other channels (i.e., email), you can start there. 

Don’t forget to test. 

Testing shows you what works. The tools you use for testing tend to be consistent with the channel (e.g., email comes with analytics. Google offers Google Analytics, etc.). Typically, you can branch out once you’ve identified the marketing channels that perform best for your business. 

You’re looking for stability. 

You want to get two to three channels working well before you decide to add more. Once you’ve identified your channels, use the data you’ve collected in step two to create the kind of marketing content that fits well with the customers you’ve identified.

Your content should: 

  • Attract their attention
  • Be fascinating 
  • Discuss a problem or challenge
  • Offer a solution to the problem or challenge you’ve just identified

Here’s another important detail. The research you’ve done should help you create a strong value proposition that answers the “why me?” question. Your value proposition is basically a promise. It’s the most important part of your marketing copy. 

It gives your customers a persuasive reason to do business with you. 

Your value proposition sets you apart from the competition. It gives your business an unfair advantage, and it gives you the opening you need to attract more customers, increase customer loyalty, command higher prices,  and beat your competitors. 

Here’s a detailed breakdown if you need help creating your own value proposition. 

If you’ve followed the steps I’ve mentioned above, you should have the information you need to create amazing content that draws customers in. 

4. Auditing and improving your marketing campaigns 

If you can’t measure your marketing, you can’t improve them. Part of the reason marketers waste 37 to 95 percent of their marketing budget is the lack of measurement.  Forrester’s research stated that between 60 – 73 percent of a company’s analytics data goes unused. 

Companies don’t know how to work with their data. 

  • They don’t know which problems to fix
  • They don’t know what they have 
  • They can’t see the value of their data
  • They don’t know how to evaluate or analyze their data
  • Their data isn’t available to analysts who can use it 
  • There’s too much data to go through and not enough people or time to use it

The other three steps aren’t all that helpful if you can’t see your marketing results. If you’re going to create a successful digital marketing strategy, you’ll need a plan that helps you to capture, report, and analyze the data. 

You’ll need analysts who can use your data to solve problems. 

That’s part of the problem. 

Most companies don’t have the people or processes in place to handle this. This is why it’s so important for businesses to get help. It’s too much for most companies to handle on their own — small, medium, and large companies all struggle with these issues. 

If this is the case for your organization, it may be a good idea to get help from an agency. 

You should be able to plan, implement, and optimize your digital marketing strategy.  If you can’t, it’s a good idea to get help with all or part of the process. 

Conclusion

Almost half of companies don’t have a clearly defined digital marketing strategy in place. A smaller segment of respondents haven’t connected their strategy and their marketing. Most companies are unprepared; they’re not ready to handle the requirements that come with creating their digital marketing strategy. 

If you’re feeling unprepared, don’t worry; use the information we’ve discussed as a guide. If you’re aware of the ins and outs of planning, you can create a winning digital marketing strategy in four easy steps.  

The post How to Develop a Winning Digital Marketing Strategy in 4 Easy Steps appeared first on Neil Patel.

How Do I Fund My Business? Your Top Questions Answered

Every entrepreneur asks themselves “How do I fund my business?” Some times it’s “What is the best way to fund my business?”  The answers to each are many and varied, and they depend on a number of variables.  Specifically, the question right now may be “How do I fund my business during a global pandemic?”  We have the answers you seek. 

Your Top 4 Questions About How Do I Fund My Business, and The Answers You Need

When asking yourself how do I fund my business, you are likely only thinking of traditional loans and investors.  First, it’s important to know that there are other options. That said, loans are the easiest and most reliable, despite the many pitfalls and barriers. This is true even if you have one of the best recession proof businesses around.  The need for business funding never goes away. No doubt you are asking yourself what other options you have however, especially if loans are not currently an option.  

How Do I Fund My Business without Debt?

Truthfully,  taking on debt during the course of running a business is virtually unavoidable.  However, there are debt free funding options that you can use to reduce the amount of debt you have to take on.  Aside from investors, there are grants and crowdfunding options out there.

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Crowdfunding

With crowdfunding, you don’t have to find just one or two investors that have large sums of money.  In fact, you can find a lot of investors to fund your business a few bucks at the time. Honestly, some may kick in as little as $5.

Crowdfunding Platforms

There are many crowdfunding platforms.  Yet, they aren’t all the same.  You have to check them each out and figure out which one will work best for your business.  Here are a few to start with.

Of course, there are other platforms out there, but this is a good list to start with.

Grants

There are not a ton of grants out there compared to other funding options, and competition is stiff.  Still, they are an option if you are wondering how to fund my business without debt. 

Also, requirements vary from grant to grant. Furthermore, most are only awarded to a certain number of recipients. Despite this, they are still worth looking into if you fall into one of these basic categories. 

  • Women owned business
  • Minority owned business
  • Businesses run by veterans
  • Businesses in low income areas

There are also some corporations that offer grants in a contest format that do not require much other than that you meet the corporation’s definition of a small business and win the contest. 

Companies like FedEx and LendingTree have grant contests each year. 

How Do I Fund My Business with Bad Credit? 

Consequently, If traditional loans are not an option due to bad credit, you might look into private lender options. There are a lot of them, but they aren’t all created equal.  You will have to do your research to avoid scams. Also, though all private lender rates are typically higher than their traditional counterparts, you will want to make sure you get the best rate you can. Here is some information to get you started. 

Fundation 

Fundation provides both term business loans online and lines of credit. It is most known for its working capital financing options. These are funds meant to help cover the day-to-day costs of running a business rather than larger projects. Typically, these funds come in the form of a line-of-credit

StreetShares 

StreetShares started as a service to veterans, but now offers term loans, lines of credit, and contract financing. They also offer small business loan investment options. The maximum loan amount is $250,000, and preapproval only takes a few minutes. They use a soft pull on your credit so it doesn’t affect your score. They require a minimum credit score of 620. 

BlueVine 

There are two options for small business financing with BlueVine. They include lines of credit and invoice factoring. Loans start at  $5,000 and go up to $100,000. Your annual revenue must be $120,000 or more, and the borrower must be in business for at least 6 months. Also, with BlueVine, there is a personal credit score requirement of 600 or higher. 

Fundbox 

Fundbox offers an automated process that is super-fast. They have no specific credit score requirement. You simply have to be an established business with regular monthly revenue.

Fora Financial 

Founded in 2008 by college roommates, Fora Financial now funds more than $1.3 million in working capital around the United States. There is no minimum credit score, and there is an early repayment discount if you qualify. 

OnDeck 

Obtaining financing from OnDeck is quick and easy. First, you apply online and receive your decision once application processing is complete. If you receive approval, your loan funds will go directly to your bank account. The minimum loan amount is $5,000 and the maximum is $500,000.  There is a personal credit score requirement of at least 500.

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Lendio

The secret to Lendio’s success is excellent customer service and a short, easy application process. The loan-connections service it offers slashes the time it takes to find the right business loans online. This is due to its heavily vetted network of lenders. Your personal credit score must be 560 or above. 

Credibly 

Credibly specializes in unsecured business loans. The minimum loan amount is $5,000 and the maximum is $250,000. They require a person credit score of at least 500 and at least 6 months in business.  You also have to show at least $15,000 in average monthly deposits. 

Kabbage 

Kabbage offers a small business line of credit that can help accomplish your business goals quickly. The minimum loan amount is $500 and the maximum is $250,000. They require you to be in business at least one year and have $50,000 or more in annual revenue or $4,200 or more in monthly revenue over the last 3 months. 

How Do I Fund My Business If I Don’t Know Where to Start? 

Well, you don’t.  You have to know where to start, so we are going to tell you. You start with the foundation.  How your business is set up has everything to do with fundability. Fundability is the ability to get funding for your business. How do you set up your business to be fundable? 

Separate Contact Information

Your business must have its own: 

Get an EIN

An EIN is an identifying number for your business that works in a way similar to how your SSN works for you personally.  You can get one for free from the IRS.

Incorporation is Necessary

Honestly, not incorporating your business as an LLC, S-corp, or corporation is not an option.  However, which form you choose, is.  It does not matter as much for fundability, but it makes a difference for your budget and liability protection.  Talk to your attorney or a tax professional about which option will work best for your needs..  

Also, when you incorporate, you become a new entity.  You basically have to start over. You’ll lose any time in business and a positive payment history you may have built up.  For this reason, you need to incorporate as soon as possible.

Get a Business Bank Account Now

In addition, you have to open a separate, dedicated business bank account.  There are a few reasons for this.  For these purposes, the main one is it will help create the separation from owner you need to build fundability. 

Licenses

For a business to be legitimate it has to have all of the necessary licenses it needs to run.  Do the research you need to do to ensure you have all of the licenses necessary to legitimately run your business at the federal, state, and local levels. 

Website

Spend the time and money necessary to ensure your website is professionally designed and works well.  Pay for hosting too. Don’t use a free hosting service.  Also, remember that email address you need? Make sure it has the same URL as your website. Don’t use a free service such as Yahoo or Gmail. 

How Do I Fund My Business in the Future? 

What happens after you have a fundable foundation?  Are you automatically going to have all the answers to all of the how do I fund my business questions? No, you won’t.  In fact, you won’t even be fundable yet. To fund your business into the future, you need to know everything that affects fundability so that you can make sure yours is strong. So, what exactly does affect the fundability of your business? 

Business Credit Reports

Where do business credit reports come from?  There are a lot of different places, but the main ones are Dun & Bradstreet, Experian, Equifax, and FICO SBSS.  Since you have no way of knowing which one your lender will choose, you need to make sure all of these reports are up to date and accurate. 

Other Business Data Agencies 

In addition to the business credit reporting agencies that directly calculate and issue credit reports, there are other business data agencies that affect those reports indirectly.  Two examples of this are LexisNexis and The Small Business Finance Exchange

Identification Numbers 

In addition to the EIN, there are identifying numbers that go along with your business credit reports.  Some of them are simply assigned by the agency, like the Experian BIN.  One, however, you have to apply to get.  It is absolutely necessary that you do this. 

Dun & Bradstreet is the largest and most commonly used business credit reporting agency.  Every credit file in their database has a D-U-N-S number.  To get a D-U-N-S number, you have to apply for one through the D&B website

Business Credit History

Your credit history is a huge factor in the fundability of your business.  

It consists of a number of things including: 

  • How many accounts are reporting payments?
  • How long have you had each account? 
  • What type of accounts are they?
  • How much credit are you using on each account versus how much is available?
  • Are you making your payments on these accounts consistently on-time?

The more accounts you have reporting on-time payments, the stronger your credit score will be. 

Business Information

This is a problem because a ton of loan applications are turned down each year for fraud concerns due to things not matching up.  Maybe your business licenses have your personal address but now you have a business address.  You have to change it. Perhaps some of your credit accounts have a slightly different name or a different phone number listed than what is on your loan application. Do your insurances all have the correct information?

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Financial Statements

Both your personal and business tax returns need to be in order.  Not only that, but you need to be paying your taxes, both business and personal.    

Business Financials

It is best to have an accounting professional prepare regular financial statements for your business. Having an accountant’s name on financial statements lends credence to the legitimacy of your business. 

If you cannot afford this monthly or quarterly, at least have professional statements prepared annually. Then, they are ready whenever you need to apply for a loan. 

Personal Financials

Often tax returns for the previous three years will suffice.  Get a tax professional to prepare them.   This is the bare minimum you will need.  Other information lenders may ask for include check stubs and bank statements, among other things. 

Bureaus

There are several other agencies that hold information related to your personal finances that you need to know about.  Everyone knows about FICO.  Your personal FICO score needs to be as strong as possible. It really can affect business fundability and almost all traditional lenders will look at personal credit in addition to business credit. 

Also, there is ChexSystems.  In the simplest terms, this keeps up with bad check activity and makes a difference when it comes to your bank score.  If you have too many bad checks, you will not be able to open a bank account.  Consequently, you will run into serious fundability issues. 

Personal Credit History

Your personal credit score from Experian, Equifax, and Transunion all make a difference.  You have to have your personal credit in order because it will definitely affect the fundability of your business.  That means, if it isn’t great right now, get to work on it.  The number one way to get a strong personal credit score or improve a weak one is to make payments consistently on time. 

The Application Process

This is related to when you apply and what you apply for.  Is it the right time to apply for financing? Are you applying for a product you can use or even get? 

How Do I Fund My Business?  The Answer Lies with Fundability

In the end, the key to funding any business at any time is to have strong fundability.  As a result, you have to start from the foundation and continually work to build business credit and keep all information up-to-date and accurate.  Do this, and you will be able to find the answers to all of your “How do I fund my business” questions.

The post How Do I Fund My Business? Your Top Questions Answered appeared first on Credit Suite.

How to Build PAYDEX Score Fast: And Other Dun & Bradstreet Reports You Need to Know About

If you know anything about business credit is it probably about the Dun & Bradstreet PAYDEX score.  D&B is the largest and most commonly used business credit reporting agency. The PAYDEX score is the score from Dun & Bradstreet that lenders use most often.  This is likely because it is the most comparable to the consumer FICO, so they feel like they can easily understand the information it is telling them. Follow these tips to build PAYDEX score fast.<

Build PAYDEX Score Fast, but Don’t Forget the Other D&B Reports

Your Dun & Bradstreet report is among the first things a lender will look at when determining whether to do business with you. They offer database-generated reports to their clients to help them decide if you, a potential vendor, supplier, or business partner, are a good credit risk. 

A company will rely on the D & B Report about your firm to make informed business credit determinations and avoid bad debt. Dun & Bradstreet takes several factors into account in creating such a report. Let’s look at all of these factors in turn, starting with the PAYDEX.  Afterall, you cannot understand how to build PAYDEX score fast without understanding what exactly the PAYDEX is.

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PAYDEX Score

The PAYDEX Score is Dun & Bradstreet’s score that tells the lender how well your business has paid the bills over the past year. D & B bases this score on trade experiences documented by vendors.  It ranges from 1 to 100. The higher the score, the lower the perceived risk.

We will discuss this more in depth later, but the quick answer to how to build PAYDEX score fast is to pay your business obligations on-time and consistently. The trick is getting those payments reported to D&B and not personal credit reporting agencies.

In addition to the PAYDEX, D&B uses the following. 

Delinquency Predictor

To estimate how likely a company is to be late in paying debts, Dun & Bradstreet uses predictive models. They use predictive scoring, which takes historical data to try to predict future results. They do this by figuring out the potential risk of a future decision, then they compare the historical information to a future event. Thus, predictive scoring only represents a statistical probability, and not a guarantee.

Financial Stress Percentile

The Financial Stress Percentile compares companies in categories such as region, industry, number of employees, or number of years in the business. Financial Stress Score Norms determine an average score and percentile for similar firms. 

Financial Stress Score

Dun & Bradstreet generates Financial Stress Scores to predict how likely it is a business will fail over the next twelve months.  These scores range between from 1,001 to 1,875. A score of 1,001 represents the highest probability while a figure of 1,875 shows the lowest probability of business failure.

Financial Stress Risk Class

This is a rating from D&B that places business in classes from 1 to 5. Class 1 includes businesses least likely to fail, while class 5 includes those firms most likely to fail. Therefore, a D & B customer can rapidly divvy their new and existing accounts by risk and then determine how to proceed. If your business is shown as being Discontinued at This Location; Higher Risk; or Open Bankruptcy, you are going to automatically get a 0 score.

Financial Stress Score Percentile

This score has a 1-100 ranking where a 1 percentile is most likely to fail and a 100 percentile is least likely to fail. If D&B identifies a company as financially stressed, that indicates it has stopped operations following assignment of bankruptcy, voluntarily withdrawn from business operation with unpaid obligations, or closed up shop with a loss to creditors.  It could also mean a company is in receivership, reorganization, or has made some sort of an arrangement for the benefit of creditors.

Supplier Evaluation Risk Rating

The Supplier Evaluation Risk Rating (also called a SER Rating) predicts how likely it is a company will get legal relief from creditors or end operations without paying creditors in full over the next twelve months. Once Dun & Bradstreet calculates the Financial Stress Score percentile for your company, they apply a second set of rules to calculate the SER Rating, on a scale of 1 – 9. A 1 means your company is least likely to fail to pay suppliers. A 9 is the opposite, showing the highest likelihood.

Credit Limit Recommendation

A D&B Credit Limit Recommendation includes two recommended guidelines:

  • A conservative limit, recommending a dollar benchmark if a company’s policy is to extend less credit to minimize risk and
  • An aggressive limit, suggesting a benchmark if a firm’s policy is to extend more credit with potentially more risk.

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D & B bases these dollar guideline levels on a historical evaluation of the credit demand for similar businesses, with respect to employee size and industry. Dun & Bradstreet assesses how likely a business is to continue to pay your according to the agreed-upon terms, and how likely it is to experience financial stress in the next twelve months.

D & B Rating

A D&B Rating helps lenders swiftly assess a business’s size and credit potential. Dun & Bradstreet bases this rating on details in your company’s balance sheet, plus an overall evaluation of the firm’s creditworthiness. The scale goes from 5A to HH. 

Composite Credit Appraisal

This number, between 1 through 4, makes up the second half of your firm’s rating. It reflects Dun & Bradstreet’s overall rating of your business’s creditworthiness. They analyze company payments, financial information, public records, business age, and other factors.

If your company does not supply current financial information, you cannot get a Composite Credit Appraisal rating of better than a 2. The 1R and 2R rating categories show company size only based on the total number of employees.  Consequently, these ratings are assigned only if your company’s file does not contain a current financial statement. Employee Range (ER) Ratings apply to specific lines of business not lending themselves to categorization under the D & B Rating system. These kinds of businesses receive an Employee Range symbol based upon the number of employees and nothing else.

In general, when Dun & Bradstreet does not have all of the information they need, they will show that in their reports. However, omitted information does not necessarily mean your firm is a poor credit risk.

D & B Data

Finally, any report is only as good as the data it originates from. Dun & Bradstreet’s database includes over 250 million companies around the world. It includes around 120 million active companies and about 130 million companies which are out of business but kept for historical reasons. D & B continuously gathers data and works to improve its systems to ensure the greatest degree of accuracy feasible. Businesses should provide D&B with a  complete financial statement to ensure as accurate a report as possible.

Build PAYDEX Score Fast: Practical Tips

While it is tremendously helpful to understand all the different reports Dun & Bradstreet can generate for your business, when it comes to getting funding you need to know how to build PAYDEX score fast.  Keep in mind however, fast is relative. Will it take years like it does to build a personal credit score? No, it won’t. Will it happen overnight? That’s a resounding no as well.  

It also will not happen on its own.  You cannot passively do business and expect to build PAYDEX score fast.  You have to take intentional steps toward building your business credit score.  It’s a process, and it starts with how your business is set up. Some of these steps may already be done, as often they happen in the course of opening a business.  Some of them however, may not have seemed necessary at the time. When it comes to building PAYDEXs however, they are absolutely necessary. 

Regardless of where you are in the life of your business, it is never too late to take the steps necessary to build PAYDEX score fast. 

Build PAYDEX Score Fast: Set Up Your Business as a Fundable Entity

Many times, in the early days of a business, business owners find it easy to run the business as an extension of themselves.  They operate as a sole proprietorship, using their own address and phone number as contact information. There seems to be no reason for a separate bank account, and an SSN works just find when asked for. 

To build PAYDEX score fast however, this will not work.  Your business needs to be separated from yourself as the owner.  It needs to appear to lenders to have fundability on its own merits, not yours.

Steps to Set Up Your Business as a Fundable Entity

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Separate Contact Information

Contact information is an identifying factor.  If you apply for credit with your personal address and phone number, that application is going to pick up you’re your personal credit report. Your business needs its own phone number and address.  If you don’t have an actual location or separate phone line, you can still accomplish this. There are a number of options for phone numbers that will ring to your current line, and virtual offices offer a physical mailing address along with many other services. 

Get an EIN to Use in Place of an SSN

This is easy to do and completely free.  It can be done online at IRS.gov in a matter of minutes.  The point is to use this number, instead of your social security number, to apply for credit in your business name.  This way, the account will report your information to the business CRAs, including Dun & Bradstreet.

Incorporate Your Business

Whether you choose to incorporate as a corporation, S-corp, or LLC does not matter when it comes to fundability.  Make that decision based on other factors, like how much liability protection you need and your budget. You do need to choose one though. Operating as a sole proprietorship will not work well if when building business credit.

Get a D-U-N-S Number

If your follow every single step and do not do this one, you will never build PAYDEX score fast.  In fact, you cannot have a PAYDEX score at all if you do not have this number. It’s free also, and easy to get on the D&B website.   However, they will try to sell you a ton of other services that you really do not need.  Just get the number and move on. 

Open a Separate Business Bank Account

Not only will this help you keep your business expenses separated from your personal expenses for tax purposes, but it will also help you when you apply for credit in your business name.  Some vendors and lenders like to see a business bank account with a minimum average balance before extending credit.

Build PAYDEX Score Fast: Vendor Credit

Separating your business from yourself is not the whole story. That’s really just laying the foundation that you can build on.  You have to stack the blocks, and they have to be stacked in order. You can’t just follow all these steps and then go apply for regular business credit cards with your business credit.  It still doesn’t exist. 

The key to building PAYDEX score fast is the vendor credit tier. This is how your will initially build your PAYDEX score so that you can apply for credit from those lenders that will want to see a strong score.   

The vendor credit tier includes starter vendors that will issue invoices with net 30 terms without even checking your credit.  Set up your account in your business name, and they will report your on-time payments to the business credit reporting agencies.  It is important to note that not all of them report to all the CRAs, so be sure you find those that report to Dun & Bradstreet if you want to build PAYDEX score fast.  The more of these vendors your have reporting, the faster your score will grow. Remember though, you have to pay on time.  

Build PAYDEX Score Fast: Other Ways to Get Accounts Reporting

At the same time, you can talk to vendors you already do business with.  In light of the fact that you already have a relationship with them, they may be willing to offer net terms without checking credit and report payments.  Check with utilities too. They will sometimes report payments to D&B if you ask. The more accounts you get reporting, the faster your score will build. With each on time payment your score will only get stronger.

Check out our best webinar with its trustworthy list of seven vendors to help you build business credit.

It is Possible to Build PAYDEX Score Fast with the Vendor Credit Tier

This process is not only important for building PAYDEX score fast, but really for building PAYDEX, or any business credit at all.  If you do not separate your business from yourself, any credit accounts you get approval for will report payments to your personal credit.  That doesn’t affect your business credit score. If you follow these steps however, you will be able to build your business credit score on each report, including your PAYDEX report, faster. 

 

The post How to Build PAYDEX Score Fast: And Other Dun & Bradstreet Reports You Need to Know About appeared first on Credit Suite.

Time for a Change? 6 Reasons to Swap Your Old Card for a New Business Credit Card

…And How to Find the Best New Business Credit Card for Your Business

Just as Thor has his hammer and Captain America has his shield, every business super hero needs an ultimate tool.  You cannot really call them all weapons right?  I mean, a shield is not about destroying, but about protection.  Everyone knows a hammer is a tool.  So, in short, tools can be used as weapons, and superhero tools can serve a variety of purposes, all for the greater good.  So too, can your business credit cards.  Sometimes, however, it is necessary to pursue a new business credit card, also for the greater good.  How do you know when that time has come?  Read on and we’ll tell you.

How Do You Know It’s Time for a New Business Credit Card?

You might not think it’s a hard decision.  Most business owners fall into two camps.  Either they are happy with their card and there is no need for a new one, or you just get a new card whenever you feel like it.  Unbeknownst to most, there actually is a right time and a wrong time to get a new business credit card.  Not only that, but there is also a right and a wrong way to handle the old one.  We can help you with both.

It might be time to ditch the old business credit card and get a new one if:

1.      The Fee is More than the Benefits are Worth

Maybe you are paying a hefty annual fee, but you justify it by weighing it against the rewards and interest rate you receive with the card.  It’s always wise to review that however.  Next time you are about to fork over that fee, take a look at what your options are.  Do you actually use the rewards offered with that credit card?  Are the rewards based on fuel spending and maybe you don’t travel?  Perhaps the rewards are at dining establishments you do not frequent.

Is that interest rate really the best?  Maybe you had a great promotional rate when you first got the card but now it’s nothing special.  Maybe the interest rate was the best available at the time but you are not so sure any more.

If either or both of these situations sound familiar, it may be time to ditch the old card and look for a new business credit card.  There is no point in paying the annual fee if you are no longer reaping the benefits that made you willing to pay it in the beginning.

2.      Your Spending Habits Have Changed

Have you outgrown the credit limit on your own card?  Maybe you spend more now that your business has grown.  It could also be that you spend on different things now.  In the beginning you may have used your card mostly for business supplies and sales dinners, whereas now you may use the funds for travel expenses and inventory more often.

Things change, and those things include spending habits.  The card that worked for your spending habits before may not be the best option for your current spending habits. Take a look at what you have versus what’s available in light of this, and you may see its time to ditch your old card and get a new one.

3.      You Now Qualify for Better Perks

For most business owners, their first business credit card is the first one for which they qualify for approval.  As your business, and your credit score, grows, you can get so much more.  If it’s been awhile since you shopped around, or if you see that you are getting unsolicited offers for cards that offer better perks than your currently have, it may be time to check out what new business credit cards are out there and ditch your old one.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

4.      You Can Get a Better Interest Rate with a New Business Credit Card

Another thing that you can get stuck with in the beginning, simply because you qualify for nothing better, is a lousy interest rate.  After you spend some time managing your business, and your finances, wisely, you are likely eligible for much better.

You can start with calling your current credit card company, but if they won’t budge, it’s time to drop the old card and start looking for a new business credit card.

5.      There is Any Better Offer With No Fee

Aside from a lousy interest rate and non-existent or useless perks, you can get stuck with an annual fee.  Sometimes the fee it worth it for the perks.  However, it is important to keep watch for cards that have better perks, better rates, and no annual fee.  Even if you get the same perks and the same rates, if there is no fee you are better off. If you are getting offers that do not include an annual fee, it might be time to find a new business credit card.

6.      You Anticipate an Upcoming Large Purchase

Sometimes it is simply a matter of dollars.  If you foresee a larger purchase in the near future, you may need to start looking for a new card.  For example, if you need to buy a new industrial refrigerator or oven, or both, you might not want to put that on a card you use for regular purchases.  Not only can it mess with the amount of funds you have available, but often you can find great deals on interest rates from dealers that sell what you are looking to buy.  It can help to save money and manage finances, by keeping larger purchases separate, if you just go ahead and open a new business credit card.

Bonus: Your Old Card Is Connected to Your Personal Credit Score

You need your business cards to be based on and reporting to your business credit.  In the beginning however, most businesses do not have business credit.  They can get cards based on their personal credit score, so they never even think about business credit.

When it comes to running a business however, business credit is better.

If you have great personal credit, you may think business credit is a non-issue.  Regardless of what your personal credit looks like, as a business owner it is important that you begin to build business credit. Here’s why.

If you use business credit to handle business transactions, your personal finances will not be affected by those transactions.  This means that if your business fails, your personal credit score will stay intact.  Also, you will not be personally liable for your business debts.

In addition, paying business expenses with personal credit cards can keep balances near the credit limit.  This is true even if you pay everything off each month.  Business expenses are large, and personal credit cards usually have smaller limits than business credit cards.

Your debt-to-credit ratio is affected by this.  That will negatively affect your personal credit score even if you make payments on time.

How to Build Business Credit

You know the why, now here’s the how.

Get an EIN

It is a number for your business, kind of like your personal SSN. Apply on the IRS website.  It doesn’t cost anything, and you can use it on business credit applications instead of your SSN.  You may still need to provide your SSN for fraud prevention, but it will not be used to access your personal credit score.

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Formally Incorporate

A business must be incorporated to have business credit. The idea is that your business needs to be established as an entity separate from yourself in every way.  Incorporation not only accomplishes that, but it also offers you some liability from business debts.

Dedicated Contact Information

You need a dedicated business address and telephone number.  The phone number should be toll free, and the business should be listed in the directories with its own contact information.

Professional Website and Email

All businesses these days need a professional, user friendly website to be able to compete.  You also need an email address that is specifically for the business.  Do not use a free email service such as Gmail or Yahoo.  The business email address should use the same URL as the business website.

Business Bank Accounts

A separate business banking account is a must.  You can pay yourself from this account, but do not run personal expenses through it.

You Need a D-U-N-S Number

Yes, another number. This time it comes from Dun & Bradstreet.  They are the largest and most commonly used business credit reporting agency, so having a credit report with them is necessary for getting business credit.  The number is free on the D&B website, but they will try to sell you other services.  You don’t need any of them.

A Quick Note on How to Start Building Business Credit

Once you accomplish this, it is time to work on building your business credit score.  There is a process, and you have to work your way through it patiently.  It takes time, but the payoff is big.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

The Vendor Credit Tier

This is your way in.  These are vendors that will extend net 30 terms on invoices and then report your payments to the credit reporting agencies.  Once they start doing that, your business credit score will be established and grow from there.

This tier includes vendors such as Quill.com, Granger, and Uline that sell items you can use in your business every day.  Make a few purchases with net 30 terms, make your payments on time, and watch your business credit score explode. Find more about vendors that can help you build business credit here.

Working Through the Credit Tiers

After you have 7 to 10 accounts reporting from the vendor credit tier, it should be possible to get approval in the retail credit tier.  These are credit cards attached to specific stores such as Best Buy, Amazon, and Office Depot.

After you have several accounts reporting from the retail credit tier, you will qualify for cards in the fleet credit tier.  These cards are issued by companies like Shell, Fuelman, and WEX to be used for fuel and vehicle repair and maintenance.

The last tier is the cash credit tier.   When you have enough accounts reporting from each tier, and if you are keeping current on all your payments, your score will be strong enough to get your approval for these cards.  They are general credit cards such as MasterCard and Visa that are not attached to a specific store.  Typically, they have higher limits and more rewards options.

 

What to Look for in a New Card

This part is easy. You want something, everything if possible, to be better than the old card.  Your old tool should by default be more powerful than the old one.

  • Annual Fee– Whether the fee is the actual reason for the change or not, if you are changing anyway look for the lowest annual fee possible that also fulfills all your other needs.
  • Interest Rate– Again, maybe you are changing specifically for the lower rate, and maybe you aren’t. Either way you need to find the lowest interest rate possible that still gives you everything else you need.
  • Perks– look for perks you will actually use. If it’s all travel miles and you never travel, there is no point.
  • Credit Limit– A limit that will not handle your spending habits or the amount of your new purchase isn’t going to do you any good. Look for the highest limit you are eligible for. Remember that if you do not use it all, it will only help your debt-to-credit ratio, which in turn helps your credit score.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

As with all things, you can do an analysis of the cost versus the benefit. If the annual fee means you get a super low interest rate or perks that will save you several hundred dollars a year, it may be worth it.  Before you make a decision, consider this in light of the reason why you are changing versus what is available to you at the moment.

Should You Shut Down the Old Card?

This is where it can get iffy.  You might think it obvious that you close the old account.  That is not always the best option however.  It can actually be beneficial to keep it open.

The average age of all of the accounts on your credit report affects your credit score.  The older your accounts are, the better it is for your score.  Opening a new account already lowers that average, so closing an older account is going to lower it even further.

If you have had the account for a while, it might be better to zero it out and keep it active.  Be sure to determine what level of activity is necessary to keep the account active.  If you have to make a small monthly purchase and pay it off every month or so it may be worth it to keep and older account open.

Is it Time for a New Business Credit Card?

The short answer is, maybe.  If your credit is at a point where you can get better rates and incentives with a lower annual fee, then it is time to get a new card.  If your credit limit on your old card can’t support your current or changing spending habits, it’s time for a new card.  Lastly, if your business credit cards are on your personal credit report, it’s time to build business credit and get a new business credit card.

 

 

 

The post Time for a Change? 6 Reasons to Swap Your Old Card for a New Business Credit Card appeared first on Credit Suite.

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