Credit makes the world go round – this is very true as far as small business is concerned. Knowing how to handle credit –other people’s money- is something we all have to deal with at one point. Entrepreneurs for the most part will often need a line of credit in order to grow effectively. The recent economic downturn, while having officially ended in 2009, still continues to affect the American economy. A lot of entrepreneurs in microbusinesses are still saddled with debt.
A recent Gallup Poll showed that about 36% of US small business owners are not comfortable with their debt levels. In the same poll, 1/5 find it impossible to get all the credit they need. It’s no surprise that debt collection has become a growth industry in itself. While that in itself isn’t a bad thing,
The following infographic from FrugalDad.com explains how American debt collection might be out of control:
In a bizarre twist, phantom debt collectors have been harassing Americans from overseas, using illegally-obtained call lists. These debt collectors will often be abusive- even if there was never any debt to begin with.
Paying off your debts on time is of course, a no-brainer. It would be unrealistic to expect small business owners to not seek lines of credit or to take risks. But knowing just how much of a risk something might be is something you owe to yourself to figure out.