July 15, 2004
Do you take Discover?
Posted by Gordon Smith

Robbie Vorhaus of Vorhaus Communications, Inc. offers a personal account about the use of credit cards to build a business. A few tidbits:

* "Plastic debt isn’t just about money, though; it’s about entrepreneurial thinking and philosophy. When you’re young, as I was in the early 1990s, and absolutely convinced that you have something unique to offer, perhaps it pays to borrow on credit cards. That is because what you need at that age is blind faith."

* "These days, I consider plastic a tactical tool for laying the groundwork for business that I am reasonably certain I will secure. In other words, if I have a good reputation, a good management team, if my calls are getting returned, and I can see revenue five months hence, but I need that computer server today, I would be inclined to put the purchase on a credit card. If, on the other hand, I am using the card merely to cover expenses, I don’t see credit card debt as a good idea. If you’re floundering and using the card, you’ll find yourself floundering and in debt."

* "Entrepreneurs get caught on a treadmill with plastic. They keep hoping to get through just another month until the business turns. This line of thinking is inextricably linked to another myth: that the debt belongs to a credit card company and you can just take it and not repay. Nothing could be more wrong. When borrowing on plastic, you must always make at least the minimum payment and contact the credit card company if you cannot. That is because if you create a bad credit record for yourself, you won’t ever be able to lease equipment or be granted other forms of credit."

Nod to Dane for the link.

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