When I first started building my business, I didn’t give much thought to business credit. Like most entrepreneurs, I was more focused on cash flow, scaling, and just keeping my head above water. I didn’t realize how critical business credit could be until I had to face some tough financial decisions. Recently, I had the opportunity to sit down with Hayden Kanikkeberg on the Never Been Promoted podcast, and let me tell you, it was an eye-opener.
Hayden’s journey is something a lot of us can relate to: juggling multiple roles, making tough calls, and figuring out how to grow a business without losing control. He dropped some serious knowledge on why building business credit early can save you from a lot of headaches down the road.
Why Building Business Credit Early is a Lifesaver
Most of us don’t think about business credit until we hit a wall. When you’re bootstrapping, personal credit can seem like the easiest solution, but it comes with a lot of risk. Hayden made a point that hit home for me: “Most entrepreneurs start their businesses to maintain control, but when you rely on personal credit, you’re mixing personal and business finances, which can lead to losing that control.”
When you’re commingling your funds—using personal accounts for business expenses—you’re putting your personal assets at risk. I didn’t realize just how dangerous that could be until Hayden explained it. If you default on a business loan that’s tied to your personal credit, creditors can come after your house, your savings, and everything you’ve worked hard to protect.
Key Takeaways from Our Discussion:
- Protect Your Personal Assets: Keeping personal and business finances separate isn’t just smart—it’s essential. If you mix the two, you’re exposing everything you own to business risks.
- Establish Credit Early: The sooner you start building business credit, the better. Even if your business is just getting started, setting up vendor accounts with companies like Staples or Amazon can go a long way in establishing a solid credit history.
- Leverage Business Credit for Growth: Personal credit may seem like the easiest route in the beginning, but using business credit lets you keep control and scale more effectively.
Capital Without Giving Away Control
One of the biggest challenges we all face as entrepreneurs is figuring out how to fund our businesses. Should we take on investors? Loans? Credit? For Hayden, the answer is clear: use business credit to avoid giving away equity too early. He explained that when you bring on investors too soon, especially when you’re still in the pre-revenue or early revenue stage, you’re giving up a large chunk of your company’s ownership—and with it, a lot of your creative control.
Hayden said something that really stuck with me: “When you take on investors, they’ll want to own a large part of your business, and that means you’re giving up the freedom to run your business the way you want.”
What I Learned from His Experience:
- Investors Want Control: Taking on equity investors early can give you the cash you need, but you’re also giving up a significant piece of your business. Think carefully before you go this route.
- Business Credit Keeps You in Control: Using credit wisely can give you the capital you need to scale without sacrificing ownership.
- Cash Flow is Everything: Many businesses fail due to cash flow issues, not because their product or service isn’t good. Having a line of credit can help you weather tough times and seize new opportunities when they arise.
Reflections from the Interview
Sitting down with Hayden really changed the way I think about business finances. Before, I thought personal credit was a necessary evil in the early stages of running a business. But now I realize that starting with business credit, even before you have revenue, is not just smart—it’s essential.
Here’s What I’m Taking Away:
- Start Early, Even If You’re Pre-Revenue: You don’t need to have cash rolling in to start building business credit. You can open accounts with vendors, and by paying them off early, you start building a history that lenders will look at favorably.
- Don’t Mix Personal with Business: Keep your personal finances completely separate from your business. Once those lines get blurred, you’re putting everything on the line.
- Small Steps Add Up: Even small lines of credit can help you build a solid foundation. It doesn’t have to be a huge amount—just something to start building that payment history.
- Cash Flow Flexibility is Key: Having a line of credit gives you the freedom to make moves when the timing is right. It’s not about using credit all the time, but having it available when you need it.
- Be Ready for Opportunities: Many entrepreneurs miss out on big opportunities because they don’t have the cash or credit ready when the moment comes. Having a credit line in place ensures you won’t be one of them.
Hayden’s approach is all about being proactive. Rather than waiting until your back is against the wall, start building your financial safety net now. As he put it, “You don’t want to be scrambling for cash when the opportunity to grow comes knocking.”
Final Thoughts
If you’re serious about scaling your business, you need to start building business credit now. Relying on personal credit puts your assets at unnecessary risk. Business credit gives you the capital to grow while keeping control in your hands. The earlier you start, the better positioned you’ll be when opportunities or challenges arise.
Don’t wait for the perfect moment—set up your credit lines and protect your business from the get-go.
For more insights from Hayden, listen to the full episode of Never Been Promoted: How to Build Business Credit From Day One with Hayden Kanikkeberg
CONNECT WITH HAYDEN KANIKKEBERG:
Website (Company): https://www.jgalt.io/