Has the credit crunch affected your business credit line?
How is that affecting your business? What steps are you taking to adjust?
Staff -- Gifts and Dec, 6/1/2009 12:00:00 AM
Sue Sacks, Options Gallery, Inc., Healdsburg, CA
No, I have not experienced any difference in my credit line. I will say that I'm seeing a higher amount of people that are paying in cash than is normal. I think that people are really looking at these credit card charges and deciding how they want to pay for their merchandise. I am also experiencing a higher number of disputed charges on my business account. So far, my credit card company is taking care of these without any additional fees charged to me. [What is happening] is charges are being made on my credit card account without my authorization. The credit card company has usually called me to ask if they are mine. [These charges] seem to be coming from other countries and being charged to credit card accounts. I am not the only retailer that this is happening to.
Gene Oberhauser, Imagine Gift Store, Warren, RI
After over 35 years in business with only one loan to help me get started, I have learned that there is no greater way to have stress than having credit worries. Years ago when I worked in sales for Hallmark Cards, I saw that the owners of stores that did poorly felt it was not their job to help stock the shelves, meet the customers and clean the floors. Most went OB (out of business)! Here are a few of my rules relating to a credit crunch: Rule #1: Establish an emergency fund for down times. Rule #2: Never expand or add a store on credit. If you have to borrow money to expand, don't. Rule #3: When your business is doing well, imagine the worst-case scenario, multiply by two and formulate a [recovery] plan. Rule #4: Plan a way to pay back all loans in 18 months — max! Rule #5: Watch every penny in your business, adopt the Sam Walton philosophy.
I do not believe in using a third party for credit. If you are, however, in that stressful situation, talk about it with your landlord, banker, family or key vendors. Above everything else, be honest about the situation. With hard work, we will get through the tough times.
Kim Mikeska, Papel, San Angelo, TX
Yes, the credit crunch has had a definite affect upon my credit line. Even though I have a long and established positive credit history with dozens of vendors, nearly every new vendor is now requiring credit card pre-payment for opening orders. I have even had some who, because of the current credit crisis, are unwilling to extend terms after that — quite disheartening to someone who has struggled for years to build good credit with my vendors. This has a direct affect upon how many new vendors we choose to order from. Rather than always looking for new vendors, I now find myself increasingly looking to add new items or categories from vendors where I already have established terms. One tip: Be sure and know the closing dates for your credit cards. I can extend the amount of time I have to sell an item by making sure that it is shipped and billed by the vendor on or shortly after the closing date of my current credit card statement. That way it isn't billed from the credit card company until the following statement, and I have an additional two to three weeks after that to pay off the card.
We would love your feedback!
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