When Kitson Walker’s employer laid him off during the Great Recession, he wasn’t as panicked as most people would be. That’s because he had already laid the groundwork for a successful business. He started his facilities support service company, EBS-4U Inc., in Alpharetta Georgia, while he was working and that approach gave him a strategic advantage that not only softened the blow when he was laid off, but helped him get a jumpstart on his entrepreneurial endeavors.
“I like to think of myself as a chess player, as opposed to a checkers player,” explained Walker when I met him recently at the Goldman Sachs 10,000 Small Businesses Summit. “Chess requires strategy,” he said, while checkers doesn’t really require much strategy. “I apply that same concept to my business.”
Walker was working at a Fortune 500 company when he decided he would eventually strike out on his own. He went through the formalities of starting his business, including registering it with his state, early on. “I knew when I was ready to start my business, one of the first questions they ask is, ‘How long have you been in business?’ From a strategic standpoint, even though I wasn’t working in it full time, I was establishing time (in business).”
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His strategy is smart because newer businesses are considered higher risk and this can come into play in several ways:
- Business credit scores often take into account the age of the business.
- Certain types of financing will require a business to show a track record of six, 12, or 24 months in business and/or business bank statements to prove revenue for that time period.
- Some customers will feel more comfortable dealing with an established business.
His approach paid off. When the recession hit and he was laid off from his corporate job, he could smile and say “thank you.” His employer was shocked at his response, but Walker knew he had just been given an opportunity to go all in— starting from the base he had already established.
While running his own business has had its fair share of challenges, Walker is proud of what he’s built. He’s the first in his family to get a college degree (he went on to earn an MBA), and from there he built a company that provides jobs and contributes to the economy. His next goal is to build it to the point where he can self fund it without relying on credit or small business financing to smooth out cash flow.
“I’m just an immigrant kid whose parents came to this country by accident…and I’ve built this,” he told me.
Turbocharge Your Strategy
If you’re thinking of starting a business and would like a similar advantage, get started now.
Register your business with your state. You can do that as DBA (doing business as), or better yet, form a corporate entity such as an LLC, S Corp or C Corp. This will help get your business on the radar and give you a formal start date. Note: sometimes it makes sense to incorporate in a different state and then register as a foreign corporation in your home state. Ask your attorney or accountant for guidance if you aren’t sure which approach is best.
Get a business credit card and use it for business expenses. This will make your life easier when it comes to filing taxes for the business, and it can help you start building business credit as well. (This chart explains which business credit agencies major small business credit cards report to.)
Build business credit. When it comes time to buy supplies for your business— whether that’s shipping boxes or janitorial supplies— consider purchasing through a company that will report your payment terms to business credit bureaus and help you build business credit. (Here are three vendors that can help you build business credit.)
The first couple of years in your business will be hectic enough; you may as well get a jumpstart on establishing your company as professional and creditworthy. It can’t hurt, and like Walker, may give you the edge you need to succeed.
Download a free copy of our 14-Step Checklist to Making Your Business Legit.
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