Punch Associates Discuss If Business Credit Card Debt Is Good or Bad

At Punch Associates, a firm that specializes in helping small business owners and consumers get out of debt, we are often asked if it is a good or bad idea to have business credit card debt. The answer is that it depends on a few factors whether the debt is helpful or harmful to your business.

Personal Liability

According to Nolo Press, most business credit cards are issued when business owners sign a clause that makes them personally responsible for the debt. This means, even if you have a corporate identity, you will be personally responsible and your credit score may suffer if you fail to pay the debt.

On the other hand, not every credit card issuer is quick to ding your personal credit score if you miss a timely payment. Nerdwallet compiled a great list of which major issuers of business credit cards report payment history on the business card to your personal credit score or not. Some of the major players do not report your business card payment history on your personal credit score, including Bank of America, BBVA, Citi and Wells Fargo(!).

All of the major card issuers do report your payment history on your business credit card to commercial credit bureaus, except BBVA. Thus, the bad news is that you are usually personally liable for business credit card debt. The good news is that you can choose a card issuer that will not ding your personal credit score for your payment history on your business credit card, and you can use a good payment history on your business credit cards to improve your enterprise’s creditworthiness.

The Interest Rates

The really bad news is that the interest rates on business credit cards are ridiculously high. The average rate is around 14 percent. Obviously, at rates this high, you end up servicing a lot of interest fees, if you carry debt on the card. Also, it can be really hard to pay off the debt at interest rates this high.

Who Gets the Card

We suggest that businesses limit who gets to use business credit cards. Otherwise, you can end up with a nightmare of unexpected expenses. Some companies simply have employees front the expense with their personal credit card, keep a receipt and count upon being reimbursed.

Other Benefits of Business Credit Cards

According to Investopedia, other than helping build business credit, business credit cards have a few more benefits:

  • They are easier to qualify for than a bank loan.
  • They are convenient because they allow one to make online transactions.
  • They help weather the waiting time on accounts receivable.
  • They often provide a rewards program.

The Other Drawback of Business Credit Cards

Other than high-interest rates, the dangers of misuse by employees and the risks to your personal credit by the personal liability clause required by almost all business credit card issuers, Investopedia found that there is one more risk of business credit cards that all business owners need to be aware of. These cards do not have the same legal protections that come with consumer credit cards. Thus, your interest rate can fluctuate without notice, based upon your usage of the card. Also, you may not have much protection when you have a billing dispute or when you need to return an item purchased.

Here at Punch Associates, we suggest that business owners use a business credit card to build the creditworthiness of your business and pay the balance every month or very soon. The danger at the interest rates charged on credit cards today is that one will have tremendous difficulty paying down the balance, which may harm your company’s cash flow.

If you are aware of their dangers and use them responsibly, business credit cards can help shore up cash flow issues for a few weeks at a time and improve the credit score of your business. If you have any questions on business credit card debt, contact us at Punch Associates. We are here to help


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Daniel Doyle Pleasantville Photographer Discusses The Importance Of Business Plans

Many people love photography and would like to go into business for themselves as photographers. But, the difference between those who are successful and those who simply end up in failure have a business plan in place. The reason is that you need to determine some very basic aspects of your business that will take some research so that you succeed. All of the best technique and striking photographs in the world will not help you if you are not able to decide upon your target market and basic pricing. These are elements in your business plan.

In order to determine the importance of a business plan and its key parts for a successful photography business, we spoke with Daniel Doyle Pleasantville. Doyle began his successful photography business in his studio in Queens, NY that focuses upon studio head shots of actors and musicians in New York as well as event photography. His event work spans concerts, weddings, families and children. He has made such a name for himself that he is now tutoring young photographers to follow in his footsteps. He majored in art at Ohio State University. Doyle is now opening a new studio in his home town of Pleasantville, Ohio. +

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Why a Business Plan?

According to Doyle, to succeed in the very competitive world of studio and event photography, excellent technique that grows and evolves is a prerequisite. But, one cannot succeed without a business plan as well. As Entrepreneur Magazine states, you have to know some foundational information, such as how much you should charge for your work and what niche you will pursue. If you don’t know such basic information, your business will likely be doomed to failure.

Key Details to Flesh Out in a Business Plan

Some of the key points in creating a business plan for a photography business are as follows:

Market Analysis:

If you fail to do the marketing analysis steps, you will likely fail to find the niche that you can profitably serve. As Entrepreneur Magazine stated, you have to first identify who are the targets for your products. Expert Photography explains that this is the stage where most businesses fail because they decide everyone is their market. You have to narrow down who is realistically going to buy your photographs for the price you will need to charge in order for you to make a profit and a living. It is too expensive to have “everyone” be your target market.

Are there enough of your target market customers in your area? For Daniel Doyle Pleasantville photographer, he first decided that his local market was too small for him to begin as a startup, so he made his business flower in a larger market area first, so he could get established. For example, if you have decided to do studio photography and portraits, your biggest target market in most areas will be families who have children, but Doyle was able to find entertainers in Queens who needed publicity head shots that were unique. This is what earned him a solid reputation in his area.

Products:

Here you will carefully delineate each type of product that you will carry as well as formats, such as digital and print and dpi resolutions. Are you offering prints, albums or files online?

The Competition:

Who is your competition, and how can you differentiate yourself from what they are offering? As Expert Photography suggests, you really don’t want to try to succeed by being the “low price leader.” Leave that for Walmart.

Marketing Strategies:

How do you get your name to clients?

Wedding photographers can work with bridal boutiques and hair salons. Portrait photographers, like Doyle, worked with entertainers who were trying to get a start in the industry. His unique head shots helped market his business to other entertainers through word of mouth. Commercial photographers pay for space in directories and work through production companies.

Operations Strategy:

Will you be able to work from home? Will you rent a studio when necessary? Do you already have all of the equipment you need, or will you rent some as needed?

Financials:

How will you pay for everything you need to operate your business for the first three startup years? Expert Photography suggests you need to have back-ups of everything for emergencies. Imagine if you were in the midst of a wedding shoot and your only camera body seized up on you.

SWOT and Timeline:

Do an analysis of your strengths, weaknesses, opportunities and threats. Create an action plan to address every part of this analysis over time as well as a timeline of how you will roll out your business.

Since photography is such an enjoyable hobby, there are many who would love to go into business for themselves in the field. As Daniel Doyle Pleasantville knows from his own personal experience and success as a photographer who has one successful studio and is opening a new one, a business plan that is fully fleshed out is the only way to be able to achieve success in the crowded field.