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You have a great idea, you have mined your family and friends for loans and you have even succeeded in getting some venture capital (VC), but does that make your germ of an idea into a sure-fire success? No way, my friend, capitalization is just the start of a start-up.

Be realistic

According to Global Entrepreneurship Monitor (GEM), more than 100 million startups are launched every year worldwide,  and in the U.S., roughly 20 percent fail in the first year and almost 70 percent are gone by the 10th year. So, you need more than a brilliant idea and some backing to succeed.

If you are starting your own business and getting investment money from other people, you cannot just be an idea man, you will have to roll up your sleeves and learn to manage money.  For example, you will need to make a budget and to have a basic understanding of the profits and loss involved in your business, commonly known as a P&L statement. A balance sheet, which is a snapshot of your business’s assets, liabilities and capital at a certain point in time will be necessary as well. These basic financial tools will allow you to understand what you need, how much you are spending, where you can save, and to be accountable to those who have lent you money.

A business credit card can help

Once you are ready to rock-and-roll, moving your idea out of your parents’ garage, into a real physical location, will require something else that you might not have thought of: a ready source of credit for “incidentals” once you have maxed out your own personal credit card.  After all, you will need business cards, copiers, phones, a desk or two and maybe an employee. Ah-ha, you think, I will need a business credit card with a generous credit limit. In the past, this has stymied many a new entrepreneur. Getting a business credit card from a traditional big bank without first establishing a business history or FICO score is not easy, my friend. Luckily, others have thought of this first.

Several new companies have seen this issue and entered into the niche business of offering business credit cards to start-ups using less traditional criteria. For example, Brex, a company with an online application process, looks at who the investors are that have backed a start-up and how much they have invested, when deciding whether to issue a card. Other companies, such as Silicon Valley Bank, look at similar criteria as well as the founders’ history as entrepreneurs. Both companies say they do not consider the personal credit history of the founders. Both companies require that the balance on the card be paid off every 30 days and neither will hold the founders personally liable if the business fails and there is an outstanding balance. That is a good thing, considering how often that is the case.


A start-up business needs more than a glint in the eye. Along with a good idea and some market research to back up the thought that it might be a good idea, you will need some backing, a few basic financial skills and maybe a business credit card to get the show on the road.


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Posted 11.28.2018 - 09:00 am EDT