Building credibility remains one of the biggest challenges for small businesses. In a world where startups fail fast and fail often, your trustworthiness and reputation are key to creating a loyal customer base, securing financial support, and growing your business.
So how do you go about building a ‘credible’ business?
There are two sides to business credibility.
First, it’s your reputation and how potential clients or investors perceive your business. Second, it’s your ‘credit worthiness’ in terms of lending and financial support.
As we’ll discover, these two sides are intrinsically linked. Let’s take a closer look.
Credibility: Perception and Reputation
It’s a competitive world for small businesses. You can’t win the trust of prospective customers overnight, but you can certainly start building it in preparation for future sales.
Your credibility stretches across your brand, your products and services, and everything else you do. First impressions are incredibly important when it comes to how other people see your business, therefore it pays to boost your business image as much as possible.
There are many different ways to do this. Here are 10 that we recommend:
- Use a recognized virtual business address. Even if you normally work from home or a third location, a virtual office gives you a place to receive business mail, meet on-site with clients or investors, and use drop-in workspace whenever you need it. Plus it looks much more professional than using your home address.
- Consider setting up as an LLC (Limited Liability Corporation). It signifies you’re serious about your prospects and you’re planning for growth. Plus, it will work in your favor when applying for business credit (see below).
- Don’t try to do everything on your own. Calls, customer queries and scheduling appointments are a huge drain on your time and energy. So why not outsource those responsibilities to a reputable live receptionist service? In addition to saving time, you’ll also ramp up your customer service standards along the way.
- Choose a business phone number rather than your cell phone. A number with a regional area code is a great way to build local connections.
- Use a cloud-based VoIP phone system. It’s low-cost and enables you to set up extensions and menus, which provides a more efficient experience for callers.
- Record your own call greetings rather than using automated messages. It sounds friendly and professional, and shows that you’ve taken the time to do the job properly.
- Get real email addresses that contain your domain name. A ‘business’ email with a @yahoo or @gmail extension looks sloppy and unestablished.
- Have multiple emails for different purposes, such as customerservice@ and returns@. It helps you categorize inquiries for faster response.
- Invest in smart, good quality business cards. It might seem old-fashioned, but not everyone likes to swap Twitter handles or digital contact cards.
- Use meeting rooms from a professional setting such as a virtual office center, rather than a coffee shop.
Remember that your first interaction with a prospective client — be it a phone call, or the first time they see your website — will determine your immediate future with them, so it pays to do everything you can to build their trust and help them understand that you’re worth their time.
Credibility: Obtaining Financial Support
Now that we’ve discussed how to raise your credibility in terms of trust and perception, let’s look at how to build your financial credibility ahead of applying for a loan.
Here’s the bad news: getting business credit isn’t easy. According to Fundera, about 80% of small business owners who apply for a bank loan get rejected. However, the good news is that most rejected applications can be easily rectified. It’s a case of taking the right steps, in the right order, and checking every requirement in full.
Fundamentally, companies and owners must have three main requirements in place:
- Cash flow: Lenders look for healthy cash flow, as this is a strong indicator that you will be able to repay the loan to the agreed timescales.
- Collateral: Should they need to recoup their costs, lenders require some form of collateral. This can include business inventory, property, or even unpaid invoices.
- Credibility: Lenders will assess the ‘credit worthiness’ of your business to decide whether you are a trustworthy borrower.
In most cases, you’ll need a business address and phone number before you can be considered for credit; very few reputable lenders will extend credit to a home-based business running off a cell phone number. Would you?
A virtual office can fulfil many of these requirements — such as an office address and a business phone number — which means you don’t need to pay for a full-time office.
Plus, you can use your virtual office address to incorporate your business. This will enable you to get a separate credit history for your business, which helps safeguard your personal assets (ie. your home) and protect yourself from any future challenges, such as financial difficulty or legal proceedings.
Here’s what else can you do to help build financial credibility:
- Get a federal tax identification number (EIN) for all federal tax filings.
- Use your full legal business name on all documentation and keep your information up-to-date.
- Open a business bank account in your company’s legal name and steer any business transactions through this account.
- Pay your suppliers and creditors on time.
- Keep your public records clean.
- Get a business credit card – preferably a card company that reports to the credit reporting agencies.
While not exhaustive, these tips will give you the foundations to begin building your business credibility. Take your time and don’t try to cut corners; your trustworthiness and reputation are key to creating a loyal customer base and securing the support you need for the prosperity and growth of your business.