Working with entrepreneurs for nearly a quarter century, I’ve come to realize that the best time to ask for money is when you don’t need it, or when you already have it. The worst time to ask for money is when you need it.

One of the most important aspects is having credit.

When you have credit, you have the ability to borrow before the frustration of not having money catches up to you.

When you don’t have credit, the ability to borrow is harder.

The more cash you have, the more likely you are able to get more. It might be expensive cash, but you can get it. Many of us running small businesses know the phrase Cash is King! In tough times, cash is what you need to stay afloat.

Expensive cash can eat up your small profit, which could, over time, put you in danger. So the ability to manage that is key, and the way you do that is by developing credit. This is why credit can get you capital. You build your credit, you build your capital.

Working with entrepreneurs for so long, I’ve seen it from the lowest credit possible to the highest possible. From the most damaged to not a hair of damage. What I’ve learned is this:

Those who have great credit have created access to capital and those who have bad credit have some potential opportunities for capital, but it's harder.

Community Development Financial Institutions (CDFI) are usually a great source for those seeking capital when they have no credit. Once you get it, think about how to build your credit for easier access to more capital when you need it, and when you don’t need it!

Once you have it, leverage it to build more credit or more capital or more services that allow you to generate more revenue. Diversify your revenue streams within the business by offering new products, services, or new territories or customers.

BEFORE YOU GO

We see our blogs as opportunities for dialogue. Please share your thoughts as comments.

1. What can you do to move from credit to capital, and then leverage the capital to build more credit?

2. What have you done to repair your credit or gain capital?

3. What other tools have you used to build credit or get capital?

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Faris Alami is Founder and CEO of International Strategic Management, Inc. (ISM). He works internationally, presenting Exploring Entrepreneurship Workshops and other entrepreneurial ecosystem — related ventures.