Jake DeMichele is a unique business guru in that he has successfully meshed self-help and financial advice in a way that very few people have. Jake is the owner of JDM Capital Solutions, a full-service commercial loan brokerage and financial solutions company. However, he also uses his business expertise and his extensive knowledge of psychology and philosophy to educate and inspire his clients and help them to find the same success in business that he has.
Jake entered the credit space in 2018 and, since then, he has built the only one-stop-shop financial solutions company, offering a wide range of lending and financial services. He did all of this while he continued to work on his Master’s degree in Marriage and Family Therapy.
Jake DeMichele truly is the perfect example of what a good business person should be. If you aspire for business success long term, you should always follow the advice of leaders like Jake. These are some of the most important tips that he gives to his clients.
Excellent Personal Credit Is the Foundation for Success
Your personal credit score tells reveals a lot of information about your financial behavior. It is a measure of your financial responsibility, and an excellent score can open a lot of doors; this would be any score over 740 based on the FICO 8-bank scoring model. Having a high score isn’t the end all be all; you also have to have the history and the data to support it.
I’ve seen credit profiles with a 730 FICO score that are significantly better than another with a 780. In this example, the person with a higher score would have limited history, or what we call having a “thin file”, which means you have too few accounts and haven’t been establishing credit for a long enough time.
A bad score, on the other hand, will put up a lot of hurdles. For example, if you are trying to acquire financing for a new business, your personal credit score is the first thing that a lender will look at. If your credit score is poor, they’re going to put you in a high-risk category. How can a lender trust you with running a profitable business when you can’t even manage your personal finances? An excellent score inspires confidence in lenders, and they will not be worried about how they are going to get their money back, meaning higher credit limits at lower interest rates.
The best thing about credit, in general, is that effectively managing your credit isn’t really that hard. There are so many great resources online that will give you a step by step guide to help you improve your credit and keep it that way. If you spend an hour a day learning about the credit system and how to improve your score, your financial awareness will be drastically different in just a year. You will have access to more capital at better interest rates, which means you have access to far more opportunities.
Cash Flow Is the Oxygen of Businesses
The number one reason that businesses fail is because they have cash flow problems. Even if you have the best idea in the world and you hire a team of amazing employees, your business will still fall apart if that cash flow dries up. That’s why the number one priority for any business, new or old, is sensible financial management. Also, for when you inevitability encounter problems in your business, at worst, you can usually pay someone to fix them. Your business will certainly fail without proper cash flow and or access to capital to get you through the highs and lows.
Learn to Leverage Credit
Leveraging credit in the right way can open up a world of business possibilities. For example, consider how long it would take to save $50,000 working a 9 to 5 job. You’d never get there and you would lose that momentum and motivation you need to actually go for it. I’ve helped clients with only 1 or 2 years of positive credit history and helped them obtain $50,000 in business lines of credit at 0% interest for the first year. The best thing about business lines of credit is that they don’t report to your personal credit profile. So many people make the mistake of using personal credit cards to fund their business activities.
The problem is that utilization makes up 30% of your credit score, which means that if you max out all of your personal cards, your score will tank 50-100+ points. It’s far more sensible to use business lines of credit so you can utilize the full credit limit without any penalty to your personal credit score. Note, some business cards do report to the personal side as well, so you would want to make sure you avoid those lenders if you’re planning on using them for working capital.
Large Credit Lines Protect You During a Recession
The banks are offering huge lines of credit right now, and a lot of people are missing an opportunity by not taking advantage of this. If you have excellent credit, you could easily get 100K or 200K in personal and business lines of credit. Plenty of people out there give credit cards a negative stigma and think because they don’t need it now, they won’t need it later. It costs you nothing to have access to this money, unlike a traditional loan. During a recession, having that large line of credit to fall back on can give you a huge advantage when it comes to accelerating your wealth.
In a financial climate where everybody else is selling their homes and pulling out of the market because of fear, you can swoop in and buy low and undervalued assets. You can see some huge returns on real estate investments and other types of long term investments during a recession if you have access to capital.