E-Commerce secrets to scale

054 - The 3 Steps to Start a Business Credit Profile and Score with Steve Wible

054 – The 3 Steps to Start a Business Credit Profile and Score with Steve Wible

E-Commerce Secrets To Scale is a marketing and entrepreneurship podcast that revolves around hearing the stories and strategies of successful entrepreneurs and e-commerce professionals to uncover scaling secrets that will impact your online store.

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Tanner:

This week on the show, Steve Wibel from Credit Suite joins me to discuss how to get started with business credit and how to get credit for your business without a personal guarantee. Credit is really important for cashflow in any business. So definitely stick around for this episode.

Welcome to the show, Steve. I’m really excited to have you go ahead and introduce yourself to the audience.

Steve:

Hey Tanner. Thanks for having me. Yeah, my name’s Steve Wibel like Bible. I’m the director of business development here at Credit Suite and I’ve built a few businesses in my time.

I didn’t understand what the internet was. I just knew that at some point our industry was going to end up overseas.

Tanner:

So, Steve, what’s your story. Can you kind of talk about those businesses that you built and, you know, how you transitioned from being an entrepreneur to more of a leadership position at a company?

Steve:

Yeah, absolutely. So, it kind of goes way back, I’m in my fifties now. My father was in the printing industry. His father was in the printing industry. It was kind of, you know, what I grew up with, ink in my blood. Were for my father I think back I was nine years old. I was in the basement working for him. And at, I just got a high school, or I just, I think I either just got out or I was just getting out. And of course, every day after school went to work at the plant. My dad did a great job, and I got into a ridiculous argument with him about nothing. I don’t even remember what it was and I quit or he fired me one or the other probably he fired me because he’s way smarter than me.

Naturally with my ego as an 18 year old, I said, I’ll show you. And I went, I joined the Marine Corps, but I’m just a genius. Right? and a couple of days later sitting at the dinner table, my dad said, Hey, why don’t you come on back? I said, sorry, can’t gotta go, go on a bootcamp. I’m outta here. Anyhow, long story short, get out of the Marine Corps, come home, what my job back. Right. But naturally you couldn’t give it to me. You’d hire somebody to replace me. He had to. So I said, you know, lend me your car and I’ll go buy a suit. Let me try sales, never sold anything in my life. Bottom line doubled his business the first year, doubled it again the second year. Didn’t understand financing whatsoever. Didn’t understand, you know, growth scaling, how to scale, none of that.

And I outpaced what he could produce, not his fault, my fault. And I left. Went, started my own company. Took it from zero to 7, 8, 10 figures, pretty big company and sold it. Got out of the industry just as guys like you were coming around, Tanner who understood the internet. I didn’t understand what the internet was. I just knew that at some point our industry was going to end up overseas. I knew it just by what my son was a video game designer was doing when he was eight years old. He was doing things for himself, that I was charging my clients five to 10 grand to do. And I was like, whoa, he’s eight years old. So I knew we were done. I know our industry was over as I understood it. The digital world is going to change everything.

So when I say I lost everything. Yeah. I personally lost everything. But as far as my credit was concerned, I walked away pretty clean.

Sold the company, got into real estate, started flipping houses, ended up owning like 300 rentals, became a Remax agent, or just a real estate agent general. And one of the top agents in the state of New Jersey, riding high on the hog feeling great, lookin good. Everything’s good. And 2008 hit and that’s okay that didn’t kill everybody. Killed a lot of us. The difference was I thought I was really smart and I was going to scale this thing to no end, but I didn’t think about any potential pullback because when I grew up real estate was the safest investment. They don’t make any more land, right? Just keep buying it, just buy more, buy more. So I was leveraging everything and my wife was begging me not to do it. Why are you doing this? You’ve got plenty of money. You should be retired, blah blah.

Anyway, so the market crashed, I lost basically everything and relocated to Florida. Got back in the business, doing just fine again. And then I’d heard about this company and what they were teaching. And there’s a reason I went through that so quickly. One of the great things about what happened to me in both those companies is the first company I took from zero to that $25 million number. And I leveraged business credit, which some people have no idea what I’m talking about, but it was credit that the business had that wasn’t tied to me. Because no individual could finance a business. It’s impossible. Nobody could generate that much credit as an individual. But I understood business credit cause my father understood it. His father understood it. Cause the manufacturing world, without it, you didn’t survive. Right. So when I got into real estate, I just took those same principles and applied the same thing.

So I scaled from zero to 300 properties under two years, which at that time was unheard of. And I’m not talking about buying nationally. This was local. My family was so local. It was in one little city of 70,000 people. Right. So it wasn’t, you know, it wasn’t like I was working, you know, some investors, they are buying all over the country. I was literally just buying where I could drive to and everything was tied to my business. None of it was tied to me. So when I say I lost everything. Yeah. I personally lost everything. But as far as my credit was concerned, I walked away pretty clean. Other than my house, my individual personal house that I obviously couldn’t put that in the possession. Actually I could have put it the business name, but it hadn’t occurred to me. And so when I got to Florida and got back into real estate, but you know, once you’ve been bitten by a snake, once it’s kind of hard to get back into the snake pit.

So yeah, I’m doing real estate and I’m doing okay, but I have no passion for it anymore. And you can tell I’m a kind of a guy who was passionate about pretty much breathing. So I said to my wife, I can’t stand this anymore. I just even walking into a house, it just makes me ill. What are you gonna do? I said, I don’t know, never applied for a job in my life. I’ve always been self-employed. Worked for my dad, worked for the Marine Corps, worked for me. So I applied for this company that was teaching about business credit. I’d never heard anybody teaching about it. I understood it. I just didn’t realize the rest of the world didn’t understand it. So they brought me in and did really well naturally because I understood it. I appreciate it. And you can hear my passion about it because of what it did for me.

At some point you’ve got to have money for employees. You’ve gotta have money for supplies.

And here I am five years later still working for this company, not going anywhere. I love what they do. I love the philosophy of this company has. Their givers, which I dig. They love to give free information, which I’m hoping to do today with you to help even business owners who can’t afford what we do, right? We’re an education company is what boils down to, we teach people how to do this, but we like to give a taste of the brownie, so to speak. And why that’s important in a scaling up world. Cause I know that’s what this pocket’s about is like we touched on. There’s really no way to individually finance a business growth. I didn’t know that when I was younger and I put my dad out of business, that’s what happened. He couldn’t finance the growth that I had brought to him, not his fault.

He was growing at a nice, steady pace. I just doubled them and then doubled again. At some point you’ve got to have money for employees. You’ve gotta have money for supplies. And in our world, that printing world, we need paper boxes, you know, shipping, you name it, ink plates, film. So my goal now is to teach every business owner what business credit is one, and two, how to achieve it because all the big businesses do it. Matter of fact there’s a retail store out there that couple people may have heard of that built their entire business based on business credit. You know it as Walmart, right? Their entire business, it started after World War II. Sam opened a store. He worked for JC penny of all people and they ended up opening a store. And what he did is he went to all the suppliers and negotiated terms for business credit, right. He negotiated terms for the product because he couldn’t afford to pay for the products to put on the shelf. And they got those terms. Well, you know who they are now, the largest retail company in the right.

There’s business credit. And then there’s funding. And they are two separate things.

Tanner:

Yeah. And I think it’s important to mention that, you know, if you are trying to scale at a rate that like a Walmart did, you really don’t have any other choice other than to leverage business credit. Right?

Steve:

Exactly. And here’s where the misconception comes in. So when I say credit to people, especially consumers, their initial thought process is cash, right? You’re going to get credit. I’m going to get you a line of credit, right? They think they can write a check against it. There’s business credit. And then there’s funding. And they are two separate things. Funding is money that goes in your bank account. Credit is a line of credit and availability of credit to buy what you need to run your business. That can be like in the printing world. It was, it was paper. In flipping real estate, it was credit with places like Home Depot and Lowe’s and high limit Visas and MasterCards. My vehicle, I never bought a vehicle in my name. Never. I don’t understand people who do that and own a business. Matter of fact Tanner, I’m gonna teach you how to buy a car today without signing for it personally. Right.

Tanner:

Well, that sounds awesome. And I’m excited to get into that. So I’m sure everyone can tell by now that this episode is all about business credit. Let’s start by defining what that is.

Steve:

That’s exactly where I was going to. Business credit is credit that goes in the company name, not tied to the owners personally. Okay. The creditors pull your business credit report and decide, determine whether or not your company is credible, whether it’s credit worthy for them to extend credit. Now, keep in mind, this is in the company name only not tied to you personally. They, some of them do report and they report on your business credit report. Most people have no idea. They even have a business credit report. Right? Have no idea. I just dealt with a large company about $12 million that got turned down for a loan with their bank because of their business credit report. And she said, what are you talking about? What is a business credit report? It’s $12 million company. Well, they pulled the report. There was things that were on there that weren’t even theres, right?

Because they’d never looked at it. Most people have heard of Dun and Bradstreet. You have something called a DUNS number. Every business gets it. It’s required. It’s free. You don’t have to pay for it. You can go to dnb.com and get it, just punch in the name of your company and the state and hit search. And if it doesn’t come up, you just gotta apply for your DUNS number. It’s free. That’s one of the business credit reporting agency’s. That’s the number one business credit reporting agency. The second one that everybody knows, but didn’t know they, maybe they had a business credit report is Experian. Experian has a consumer side and a business side. So in our world, vendors look at Dun and Bradstreet, lenders look at Experian. Get the difference. Right? Okay. So you need to make sure both those reports are solid and here’s the problem with business credit.

It’s unlike personal credit. It doesn’t happen automatically. You have to intentionally set out to build that profile.

It’s unlike personal credit. It doesn’t happen automatically. You have to intentionally set out to build that profile. Like if you applied for a discover card today and got approved and used it, it’s gone, you don’t have to worry about it. It’s going to report on your personal credit, right? You already know that going in. In the business credit world, only 7% of vendors and lenders actually repor,t 7%. So seven out of a hundred. So the problem is you could be doing business with people like in my world, the paper companies most of them didn’t report. I was doing millions of dollars in purchases from them and they weren’t reporting. So what do you do? You have to understand who does report. That’s, really what credit suite knows. And that’s what we’re good at. We understand. So again, what is business credit? It’s credit that’s tied to the business and you have to intentionally build that profile. Otherwise here’s the bad news. If you had nothing reporting on your business credit report data, nothing, no negative, no positive, no nothing. They actually give you a failing grade.

Tanner:

Yeah, of course. Because you know, the point of credit is, you know, it’s a score on, you know, your reliability and trust factors, but also your ability to make your lenders money.

So business credit actually builds quicker than personal credit as well.

Steve:

Well, yeah that’s true. Now, when I talk about business credit again, there’s funding and then there’s what we call vendor credit. Right? So if I wanted to buy your services, if I wanted to buy Tanner services, your companies and you checked my business credit report and I had a pretty solid business credit report, yeah Steve I’ll extend you net 60 terms, right? So I pay you in 60 days. And then you report that if you report. That helps build a business credit profile. The problem with the business credit reporting agencies is not only is it nothing reporting it’s worse than that. It’s actually negative. It actually says on there that this company has a potential to be bankrupt in the next 12 months. Now you’ve done nothing wrong. You’ve got no negatives, but it actually says that. Now the good news is if you put even one trade line on there, it flips, it goes the other direction.

You start getting recommended for higher limits. I saw somebody at $500 a credit to their credit report and they went from potentially going bankrupt. Their score literally went from 28 to, I want to say 78. And they were being recommended for $5,000 in credit limits, just adding one $500 line. So business credit actually builds quicker than personal credit as well. Like personal credit we all know it takes years and years and years. Business credit, if you do it on your own can take years. But literally we’ve compressed it down into under a year. Between eight and 12 months, depending on how long you’ve been in business. So the question I always get asked is, well, okay, great. So now I have a score. What’s the point? Right? Well, here’s the point? There’s two points. One we discussed in the beginning. No individual can finance the growth of a business, right?

No matter what. If your company doubled in size and you had to add 10 more employees, you need the cash and the employees, then you need all the equipment that went with it, right? So maybe 10 more computers, phone system, whatever it is you have to add. If you can get credit for that, from somebody in the business name, you could take advantage of that. It flattens your cashflow issue, right? So non-business owners, don’t get this. Everybody listening to this, we’ll get this. I talk to people all the time. They’re like, I don’t understand what is business credit? I’m like, look, if a business is doing 1.2 million, it’s not doing a hundred thousand a month. It’s doing 80 grand, 140, $90,000, 200. It’s just the way it rolls. And the problem is, you know, when you have these high months, you also spend a lot, then the bills come due the following month. Well, if you don’t have the credit to flatten that curve, you can be broke before the end of the month.

Tanner:

Yeah. I mean, cash is king, right? Cash flow is everything for a business. And, you know, leveraging credit is a great way to make sure that you have the cash needed to survive.

Steve:

Yeah. And keep in mind what I’m talking about here is not, don’t, clear your mind of what you think credit is because everything’s credit, Oh, high interest rates, all that. Not necessarily, like I said, our example, if I really needed to scale my business and want to use your services. Right. And you gave me net 60 terms, that’s interest free.

Tanner:

Right.

Steve:

Right? That’s interest free. Home Depot gives net 30 terms. So a guy like me who was spending 30 to $50,000 a month that’s game changer. Right. So 30 days interest free of 30 to $50,000 a month. What can you do with that? If you’re fixing houses up?

Tanner:

I mean, that’s like one house a month, right?

Steve:

Oh, I was doing more than that. I was doing more than that. I had it down. They were all row houses. I had it down. I could walk into a row house, three story, row house, two to three story, row house, walk out. I’d be in there five minutes and go, 28,000. I know exactly what it costs me to do it. I know what the labor cost was going to be, what the kitchen cost, but it just because they were all the same, it was like manufacturing, right. It’s like assembly line. So back when I was doing it, I could rehab. I never had a house cost me more than 20 to 25,000 to rehab and I’m talking to make it new. But they were small 900 to 1200 square foot houses. So yeah, I was doing three a month, but I didn’t only have that. I actually had over a hundred thousand in credit with that. And that’s, we’re talking supplies, not labor. So that actually was worth about 10 times that, because labor was almost always 50% of the bill. And by the way, I used to pay my labor, my contractor. So I shopped it out right. With credit cards at 0% interest.

So the first thing you’ve got to do is you’ve got to worry about what we call fundability factors.

Tanner:

What, I mean, how do you get started building your business credit profile? I mean, you said that, you know, most of your vendors, aren’t going to report anything that you’re doing, even though you’re doing everything right. And you’re paying your invoices on time, whatever what do you recommend to get started?

Steve:

Okay. So the first thing you’ve got to do is you’ve got to worry about what we call fundability factors. That’s a really cute name, but what it really is, is fraud detection. Okay? Keeping in mind that these creditors are giving credit to an entity that they can’t foreclose on, there’s nothing backing it other than the Goodwill of that company. So in order to be careful and make sure they’re not going to get defrauded, they set up these gates, these little tests to make sure you’re really in business, we call it fundability factors. And they’re really simple. And to a lot of your audience, they’re going to sound really ridiculous, but you’d be amazed at how many, matter of fact, you may not be amazed at how many people fail this because you deal with people. As far as internet goes, as far as marketing goes. The first thing they look at, the very first thing they look at is your email address. And how many times do you see this Tanner? I have a [email protected]

Tanner:

A lot.

Steve:

Way more than you want to. Right?

Tanner:

Yeah. Pretty much any small business.

Steve:

Right? And your first thought is exactly what you just said. It’s a small business. So now you’re trying to put your best foot forward with a creditor or a lender. And you just tell them your email is I have a business at Yahoo. God forbid, you say AOL or Hotmail. Right? What do you think they’re thinking?

Tanner:

They’re thinking that this is not a legitimate business.

Steve:

Correct? That’s a red flag. Now. They’re not going to necessarily deny you right out of the gate from that, but they’re going to look a little deeper. So they’re going to move on to fundability factor number two. And that’s your business phone number? Now, when I talk to small business owners, I’m not talking about manufacturers here. I’m talking about just other types of small business owners. What type of phone do you think they give me when they give me their phone number?

Well, when you fill out a credit application, if you put your personal cell phone down as your business number, you’re getting rejected.

Tanner:

Their personal cell.

Steve:

Every single time. And I get it, it’s attached to their hip, right? It’s convenient. If you call me, I want you to call me on my cell. Well, when you fill out a credit application, if you put your personal cell phone down as your business number, you’re getting rejected. They’re done, especially if you have a Hotmail address.

So I don’t want Hotmail to sue me, but anyway, you get my point. You now look like you’re really not in business. And more importantly, you may not remember this, but when I was younger, not that long ago if I wanted Joe’s pizza up on main street, I picked up the phone on the wall, literally dialed, click, click, click, click, click 411 and got the 411 directory assistance. Now there’s one, it’s called the national forum one directory assistance. Okay. And if you’re legitimately in business, you’ll be listed there. The problem is they don’t list cell phones. They only list legitimate business phone numbers. So what do you do? Do you have to go to ATT and get a phone on your desk? No, not everybody wants to do that. Right. But you can get something that I know you’re familiar with, which is a voiceover IP.

Right? A voip. All right. Now, everybody right away in their head thinks Google voice. Perfect. I got one. Problematic. Google owns that number. You don’t, you’re not paying for it. It’s free. And if you listed it, it’s going to come up Google. So when the lender looks you up, they see Google, right? You can go to a company like RingCentral. You may have heard of them. Get yourself an 800 number, a local number and ready for this, a fax number.

Tanner:

Do you need a fax number.

Steve:

Yes. I see a smile. And here’s why there’s only really one industry left that uses faxes. Lenders.

Tanner:

Yeah, or anyone, anything government.

Steve:

Yeah. Right. Or government. Right. So get a fax number. It’s digital. Anyway, it’s going to go right to your email. Just get one. I think it’s an extra $2 or a dollar. Just get one. Right? First of all, you’re filling out a credit application. It’s like filling out a job application. You know, when you fill out a job application, when you’re 18 years old, you’re panicked. Cause you look at there’s nothing on it. Right? Well, think the same thing. When you fill out a credit application, put as much on there as you can, you want as much information it’s going to make you look legitimate, right? It’s gonna make you look bigger again, best foot forward. Okay. So we’ve got the phone number. We got the email. Let’s talk address.

There are only three passing grades in the lending world. The business credit world for address three. First one was going to be commercial. That makes sense. Right? You’re a commercial building. You’re either renting it or owning it. That’s your, that’s where your business is located. No problem. That’s an A, A+. B is something called a virtual address. Now I don’t know if you’re familiar with that term. You’re shaking your head. So I assume you are. You want to be careful because there are companies out there representing themselves as virtual addresses and they are not virtual addresses. They are PO boxes. I’m going to give you some examples. A UPS store. That’s a PO box. I postal 99% of the locations, PO boxes. Easy way to figure it out. I love technology. The address they want to give you type it into Google earth, right? Google maps go to ground level and look at it. If it looks like a retail strip mall, it’s a PO box. If it looks like an office building then it’s probably a virtual address, but if you’re not sure, two companies, a hundred percent, always Regus, R E G U S regus.com and Alliance virtual offices. They’re legitimately, there are different SIC code. They are recognized by lenders as an actual office. They sued in the seventies. As a matter of fact, long before you were born, there were sued the seventies. And one to be recognized as an actual address, as opposed to a PO box.

And what I learned was if you’re not good at something, find somebody who is.

Tanner:

We’re running a little bit short on time. I’d like to ask you what your secrets to scale are.

Steve:

I think it’s pretty obvious. Well actually I’m going to step away from business credit. I learned something at a really young age that I didn’t even know I was learning. I knew when I went into business that I didn’t know anything. I was young. I was 22 years old. Didn’t know anything. I could sell. That was easy. That was the easiest part of it. Right? Matter of fact, many a sales person has crashed and burned. I didn’t know anything about business. So I was looking for a partner. I found a partner who was 68 years old and he ran the business side of it. And I ran the manufacturing side and the sales side. Right? Let him deal with the business. Then we hired a board of directors. And what I learned was if you’re not good at something, find somebody who is.

Tanner:

Yep. I love that. I say that all the time.

Steve:

I’m an old hand to hand combat salesperson. Do you know what that is? You know, walking the streets of Manhattan, going into offices, trying to get past the gatekeepers, the whole deal. Right. That’s old. When people talk about marketing, I don’t know what they’re talking about. Like when they talk about, you know, Google analytics and all that, I go, whoa, whoa, whoa, whoa, whoa. I don’t even want to know about it. I mean, I’m sure I could sit and read and learn about it. Not interested. Right. When, I’m sick, I don’t read medical books and do surgery on myself. You know what I mean? So, but it’s a hard thing for entrepreneurs to let go of because we’re control freaks, right. Something has to be done. I’ll just do it myself. And then what we do is we end up doing a C level job as opposed to an A level job. So we do everything kind of the, okay, good enough. But again, at a young age, I learned that’s not the way to do it. If you’re not good at it, get it off your plate, give it to somebody who is, you’re going to pay for it, but that’s okay because that’s going to free up your time to do what you’re really good at doing.

Tanner:

Yeah, exactly. And that’s what you should be spending all of your time, doing the things that you’re really good at, because those are the skills that you’re the best at. You need to invest all of your time in those things and make them even better by making them even better. You’re going to find a lot more success.

Steve:

Yeah. I had a guy tell me about 15 years ago when I was building my real estate team, I was one of the top teams in the country. I didn’t know when to hire an assistant, just an assistant. Wasn’t sure. Never wanted to let go of the details. And they said, if you find yourself working 10 to 12 hours a day, it’s time, hire an assistant. Then if you still want to work 10 to 12 hours, you could focus on what you’re really good at. You’ll watch your business double. And they were right. That’s exactly what happened. I moved it off my plate. I didn’t want to deal with paperwork anymore. I didn’t want to deal with any of that. So to me, that’s the real secret of scaling. Don’t do what you’re not good at. Find somebody who’s good or better than you. Let them do that. You focus on what made you great. What got you into that business to begin with?

Tanner:

Yeah, man. That’s, excellent advice. So I want to thank you for taking the time to do this interview with me today. It’s been really great. I think there’s a lot of value there for anyone listening wanting to get their business credit where it needs to be. Is there anything that I have not asked you that you think might benefit the audience?

Steve:

Oh, well, if they want to find out more, do you mind if I give a free how to build your business credit link, where they can download a guide?

Tanner:

Yeah, no problem at all.

Steve:

Yeah. It’s credit suite.com/pod-E I N.

Tanner:

Cool man. Well, we’ll make sure to link that up in the show notes. Is there a good way for anyone to get in contact with you?

Steve:

Yeah, they can call me on my direct number 727-258-5705. That’s my office line. I’m happy to answer any and all questions. We’re a low pressure company. We’re a company who loves to give away information. So don’t feel bad for asking for it. Okay. We really like to help people. Now we have a program that helps people scale it even faster. But it’s not necessarily for everyone, but it doesn’t mean we don’t want to help everybody.

Tanner:

Yeah. And I, and I think I can respect that. But anyways, thank you, Steve. We’ll make sure to put your phone number in the show notes as well.

Steve:

All right, Tanner. Thanks for having me on. I appreciate it. Had a lot of fun.

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