Nellie Akalp is CEO of CorpNet.com. Since forming more than 100,000 corporations and LLCs across the U.S, she has built a strong passion to assist small business owners and entrepreneurs in starting and protecting their business the right way. LIKE the CorpNet.com Facebook page for exclusive discounts and giveaways! To learn more about Nellie and see how she can help your business get off the ground quickly and affordably, please visit here.

For the small business owner, trying to navigate the credit and lending world can feel like a vicious Catch-22. Most commercial banks and traditional lenders are reluctant to loosen their purse strings until you’ve proven yourself with a strong credit history. But it’s difficult to develop that good record when no one will lend to you in the first place.

Many small business owners rely on the strength of their personal credit to fund their businesses. But when you use personal credit, your mortgage, auto loan and personal credit cards all affect your ability to qualify for a business loan. Using business credit separates your personal activities from that of the business. Your business credit is dependent on your company’s payment history, assets, cash flow and other financials. It doesn’t include your personal debts or other personal financial obligations.

A strong credit history is the foundation for success, as it can lower your interest rates and give you access to more capital when needed. To start building your business credit, here are the initial steps you should take.

1. Set Up a Business Entity

There’s no such thing as a business loan or business credit for a sole proprietor — that’s a personal loan. In order to receive a business loan or investment, you must separate the business from its personal owners by setting up a legal business entity — a corporation or LLC, for example. Your CPA can advise you on the best legal structure for your particular situation, as your choice in entity can have some pretty significant tax implications.

2. Get a Tax ID Number (EIN)

Every business must have a tax ID number, just like each individual has a social security number. The Tax ID number (or EIN) is a nine-digit number assigned by the IRS to business entities operating in the U.S. You’ll use this number to open your business bank account and build your business credit profile. Apply for your business’ EIN online through the IRS site — and don’t worry, the process is fast and simple.

3. Establish a Business Bank Account

Your business needs at least one bank reference. Ideally, if you need to apply for a loan, your bank account will be at least two years old (of course, there’s not much you can do to change this situation other than apply for a business bank account as early as possible). More important than your account’s lifespan, your business bank account should show a cash flow capable of taking on a business debt. Of course, the optimum average daily balance of your account will depend on your type of business and the amount of financing you’ll be seeking.

4. Get Listed with the Business Credit Bureaus

Dun & Bradstreet is one of the main business credit bureaus and runs its own business credit score. D&B gives businesses a separate credit file number (known as a D&B or DUNS number) that rates your credit profile. Go to their site to find out if your business is already listed and has a score. You can also begin the process by applying for a free DUNS number once you’ve established your business entity and have your EIN. The number is how lenders will determine your business’ credit worthiness (most business credit card and lending companies will ask for your D&B number during the application process).

5. Establish Business Credit History

Check if your trade vendors are reporting your payment history to one of the major reporting companies, like D&B. Just like with your personal credit score, the more vendors that report a good payment history, the better your business credit will be. It’s common that small trade vendors won’t report your payment history to D&B. In this case, you should compile a trade reference sheet with at least three references (include their name, contact information and credit limits) to augment your official business credit report. In addition, you should open a business credit card (in the name of the business) and use it wisely — meaning keep your balance low and always pay on time.

6. Maintain a Good Personal Credit Rating

When you’re a relatively new or small company, creditors are going to be looking at the personal credit of the person who owns the business (or any shareholders with more than 20% ownership of the company). In today’s lending environment, you should expect to be asked to sign a personal guarantee on any kind of loan or credit of the business. This isn’t always mandatory, but it has recently become common practice in the lending industry. As a result, anyone with a 20% or higher share in the company should keep a close eye on his own credit rating.

The most important thing to remember is that you can’t build business credit overnight. Business owners should think about their business credit from day one. Even if you’re self-funded now, you never know what challenges or growth opportunities will develop down the road. Having access to credit can only help you adapt to changing conditions and position yourself for success.

Image courtesy of iStockphoto, idrutu

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Nellie Akalp is CEO of CorpNet.com, her second incorporation filing service based on her strong passion to assist small business owners and entrepreneurs in starting and protecting their business. She has formed more than 100,000 corporations and LLCs across the U.S. To learn more about Nellie and see how she can help your business get off the ground quickly and affordably, please visit here.

There’s a classic children’s book, Swimmy, where a school of little fish team up and swim as one big fish to avoid being eaten. I often read this story at bedtime to my children and when I do I often realize the story line is so close to my heart as I consider the challenges facing small businesses and startups today. Because frankly (and I don’t mean to carry this metaphor too far … ), the small business is swimming in an ocean that’s far more dangerous than ever before.

Accessing business capital and credit has been particularly difficult over the past years. Consumer and business purse strings have been tight. Now we’re facing sky-rocketing fuel prices and worries over potential inflation. And large corporations grow larger and more powerful with every passing day (even “too big to fail” companies just seem to get bigger).

Now more than ever, small businesses need to band together in order to compete with their larger counterparts. It’s only by joining forces that small businesses can achieve economies of scale and have a voice that can compete with larger corporations. There is power in the collective, and businesses can harness the power of community to move forward.

So what does this mean? If you’re a small business, seek out symbiotic and collaborative relationships with other small businesses whenever possible. Whether formally or informally, build a collective co-op of like-minded businesses and individuals. Small businesses need to look at each other as partners, not competitors. Here are just a few tangible examples of how to join forces in the small business market.

1. Join a Local Meetup Group for Entrepreneurs

Whether the plumber recommends a carpenter or the web designer recommends a copywriter, business is driven by referrals and connections. Local groups — which may meet monthly in a café or hotel conference area — aim to tap into the power of collaboration, support, and most importantly, referrals. Use them to develop relationships and share advice with fellow entrepreneurs and small business owners. Check Meetup.com or your local chamber of commerce for a relevant group in your area.

If you’ve built a strong Twitter network, organize a Tweetup in order to parlay that network into an even more powerful experience through face-to-face networking. And if referrals are very important to your business, you can also consider the word of mouth referral group BNI. These groups are more structured (and have a modest fee) where local professionals meet (each chapter allows one person from each profession to join) for the sole purpose of sharing referrals, marketing tips and testimonials.

2. Join a Virtual Community for Startups

Maybe structured, in-person meetups aren’t your thing. Or your business doesn’t necessarily target local customers and clients. You can join a social network or virtual group for like-minded small business owners to exchange advice, get support, build partnerships, find help and more.

For example, Entrepreneur Connect (which is part of the Entrepreneur Network and Entrepreneur.com) bills itself as “a dynamic business-to-business marketplace that will help everyone grow.”

3. Join the Small Business Web

If you’re a software company (and committed to open APIs), consider joining The Small Business Web. This alliance of software companies (most of them small- to mid-sized themselves) is working together to serve small businesses through affordably priced software and easier access and integration of multiple tools. And if you’re a small business looking for an invoicing or e-mail marketing app, take a look at the SBWeb’s directory of companies. They’re all committed to helping the small business thrive.

4. Pay it Forward

Successful networkers understand that networking is a two-way street. Always be on the lookout for opportunities to help fellow small businesses. By consistently bringing value and opportunity to those in your network, you’ll be attracting others to your network. In short, by giving business to others, you will get business in return.

5. Build Informal Alliances with Like-Minded Companies

There’s a multitude of ways for you to reach out to other companies who share your views on customer service, business, product development, etc. This could be as simple as offering to swap guest posts for each company’s blog or introducing a business owner to your own Twitter or Facebook communities. You should think of alliances that could bring value to your own customers, as well as an opportunity for you to expand your visibility to new audiences.

6. Adopt a “Support Small Business” Mindset at Your Own Company

Several coalitions and movements, such as the 3/50 project, encourage consumers to support their local economies by shopping at independently owned brick-and-mortar businesses. On an informal level, you can adopt a similar mindset at your own business. Analyze your current vendors and service providers for opportunities to “downsize.” Are there any places where you could be supporting a small business — virtual or physical — instead? If you’re encouraging others to support small businesses, make sure you’re also heeding your own words. After all, change does begin with you.

Image courtesy of iStockphoto, mattnomad

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The study found women rely heavily on both blogs and message boards when seeking advice and recommendations (Blogs: 21% of the total U.S. online population, 63% of the BlogHer Network; Message Boards/Forums: 38% of the total U.S. online population, and 92% of the iVillage community), especially when looking for information to help with the purchase of new products (Blogs: 22% of the total U.S. online population, and 59% of the BlogHer Network.)

BlogHer users are more active with the top three social media platforms vs the average woman online (Blogs, Facebook, Twitter). In addition blogs are only second to online search as the preferred media source for product purchasing information for BlogHer Network users.

"The twenty million users who visit the BlogHer Network favor blogs over every other media source for reasons both personal and pragmatic," said Elisa Camahort Page, BlogHer co-founder and COO.

"Even as the scale of overall social media usage continues to grow, blogs continue to be a highly reliable resource for all women online as they exert their control over the household purse strings."

Other highlights from the study include:

*Among the iVillage community, 73 percent say they are sharing topics on message boards/forums that they would not share on social networks. Of those, relationships (61%), health (45%) and work-related (39%) issues were the main topics they would not share on social networks.

*Message boards/forums are second only to conversations with friends and family as the preferred source of product purchasing information for iVillage users.
 

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In the coming year, more than half (52%) of email marketers said increasing customer loyalty was a top email marketing goal. Overall, 51 percent of respondents want to drive incremental revenue with their email program; 65 percent of those with larger email budgets says that’s that their top goal in 2010.

"When consumers’ purse strings tighten, savvy marketers remain respectful but attentive, so their brands are top of mind when their customers are once again ready to buy," said Bill Nussey, CEO of Silverpop.

"Today’s marketers are mindful of the important role relationship building plays in a successful marketing strategy, and they understand the unique ability of email to engage customers."

While marketers remain positive about the role email will play in meeting their goals in 2010, they are also prepared to face related challenges. Thirty-seven percent of respondents said the biggest challenge in the coming year will be "inbox clutter.

Overall, more than eight out of 10 (84 percent) plan to include social media into their email programs in the coming year, and 38 percent will add SMS. Marketers with budget increases are even more likely to add these to their programs; 89 percent will incorporate social media and 44 percent SMS.

"Linking email to popular social networks can be a very successful strategy," Nussey said. "If the messages are timely and relevant, recipients will share them with their networks, and the opportunity for additional exposure increases exponentially. And as customers become more mobile, their marketing must reach them in more timely ways and through channels such as SMS."
 

Related Articles:

>10 Reasons Social Media Isn’t Replacing Email

>Emails With Coupons Achieve Higher Open Rates

>Majority Of Consumers Want To Interact With Brands Online

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Online retailers may not feel the hit as much as some brick and mortars, however. According to Nielsen, online retailers, as well as value retailers like dollar stores, discounters, and club stores will attract "the lion’s share" of holiday spending. The firm says consumers will want to minimize trips and search for the best values.

According to Nielsen’s findings, 86% of consumers expect to spend the same or less than lest year. There is a 7% increase in the "less" category, from last year. Still, Nielsen thinks holiday sales will rise 0.03%, accounting for $90 billion.

"Given everything the consumer has absorbed over the past 12 to 18 months, the fact that we expect this coming holiday season to be flat in dollars can be viewed as a modest positive," says James Russo, Vice President, Global Consumer Insights at the Nielsen Company.

"Americans have undergone a fundamental change in how they spend their money, and the days of stretching finances to make purchases not deemed as necessary are over, at least for the time being," adds Russo. "That said, our research has shown that consumers are looking forward to loosening their purse strings a bit, but only once they feel more confident about the state of the economy and their personal financial situation."

October approaches. Many consumers begin shopping well before Thanksgiving, and that means the time is close at hand to begin preparing. Online discounts and free shipping have historically been popular motivators for purchases. If you can swing these things, it will likely be in your best interest to do so.

It’s as good a time as any to get heavily involved in social network participation as well. If you’re a retailer, you’ll want to be out there conversing and staying in people’s minds as they search for gift ideas for their friends and families.

Nielsen says traditional items like apparel, toys and technology will be the most popular categories, but at restrained levels and primarily sold in "value" channels. They say products like cookware, kitchen items, bed and bath accessories and alcoholic beverages will also do well. Gift cards are one category where consumers plan to spend more this holiday season, followed by toys and apparel. Office supplies, pet stores, home improvement and drug retailers are not expected to so as well.

A couple of additional findings were that 20% of households said that they had no plans to entertain at home or away from home during the holidays, and spending cut-backs are being driven by all income groups.

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