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What Is Contextual Targeting? How It Works (in 5 Steps)

Posted: 28 Feb 2020 04:08 PM PST

When it comes to paid advertising – be that on Google, Facebook, Twitter or any other online advertising platform – it can often be difficult to run a successful campaign, especially if you're not advertising to the right people. 

But the truth is that most online consumers don't pay any attention to the ads they see. In fact, according to a recent HubSpot study, about 64% of respondents agreed that online advertisements are annoying and intrusive. Another 45% of respondents said that they don't even take notice of online ads, even when they do see them.  

What this means is that you can literally spend thousands of dollars on online advertisements and still not get anywhere. This is exactly where contextual targeting comes in.

Contextual targeting allows advertisers to place their ads based on very specific factors about their target audience. This makes it more likely that their ads will be seen by the people who are most likely to interact or take action after seeing the ad.    

Let's take a deeper look at contextual targeting to help you better understand how it works and how you can apply it to your next advertising campaign. 

What is contextual targeting?

In simple terms, contextual targeting is when ads are displayed on relevant websites. This can be likened to the digital version of a print ad in a newspaper or magazine, where the ad would be relevant to the publication's niche or industry.   

Imagine picking up a cooking magazine. You would likely see print ads for recipe books or dishware. If you picked up a fishing magazine, you would see ads for fishing gear and tackle. This is contextual targeting. These ads are placed on the assumption that a person reading a magazine about cooking is likely to be interested in recipes or dishware, or that a person visiting a fishing website is likely to be interested in ads for fishing gear or tackle. 

Why is contextual targeting effective?

By placing ads contextually, based on internet users' specific behaviors, advertisers can hyperfocus their efforts, making it so that their ads will only be seen by the people most likely to take action. 

In the past, marketers were limited in how they could target their ads. Due to this, ads were often placed in high-traffic areas, basing the ad's placement on quantity over quality of potential leads. 

Today, things have changed, making quality much more important than quantity. Think about it for a second: What's the point of having 10,000 people see your ad if none of them are likely to take action when they see it?

This is where contextual targeting comes in. Contextual targeting makes it easier for advertisers to reach the right people, at the right place and at the right time.

Cookies and tracking

For contextual targeting to work, online advertisers need information about certain user behaviors, such as the sites they've visited in the past. There are a few different ways to track this type of information, but the most common method is tracking cookies. Cookies are made up of a few simple lines of code, placed on an internet user's browser when they visit a website. Initially, tracking cookies were only used to help websites recognize and remember their users. But today, cookies are often used for profiling and targeting ads to the right type of people.

As you know by now, contextual targeting allows brands to hyperpersonalize ad placement, putting ads where they are most likely to be seen by the right people. To create this type of optimized ad campaign, you'll need to follow a few simple steps:

  1. Building your buyer personas
  2. Mapping out your buyer's journey
  3. Analyzing the competition
  4. Researching your topic and keywords
  5. Creating a contextual ad

Step 1: Build your buyer personas.

A buyer persona is a semi-fictional representation of a brand's ideal customer. Your buyer personas need to outline a few of your ideal customer's traits. This will help you learn more about your target audience and where they spend their time online. 

A buyer persona should outline a few common issues your ideal customers face in their lives, as well as where they hang out online and what drives them to learn more about their problems.

Step 2: Map out your buyer's journey.

The buyer's journey is categorized into three distinct stages: awareness, consideration and decision. In each of these stages, your buyers will be thinking, needing and experiencing different things.

Essentially, mapping out the buyer's journey adds another layer to your buyer personas. This helps you better align your advertising efforts to the specific mindset, interests and behaviors of your target audience, according to which stage of the buyer's journey they belong to.

Step 3: Analyze the competition.

The next step is to perform a bit of competitive analysis. For this, you'll need to find out what websites your ideal customers are visiting. Knowing and understanding where your ideal customers find their information is vital to properly target your ads at those people who are most likely to see them and take action.

Step 4: Research your topic and keywords.

Once you've created a list of websites, you'll need to create a list of keywords that are relevant to those sites. These are the keywords that your ideal customers are using to find the websites you identified in Step 3.  

Contextual targeting is primarily based on a website's topic and keywords. So, when creating paid advertisements, you'll need to select highly targeted keyword topics in order for your ad to show up on relevant websites where your ideal customers are most likely spending their time. 

You can use Google's Keyword Planner or other online tools to help you find relevant keywords with high search volumes and relatively low competition. Then, you'll use your hand-selected keywords to define where your ads will appear.

Step 5: Create contextual ads.

The final step is to actually create and launch your contextual ad campaign. Remember that contextual targeting is all about making your ad as relevant as possible. Therefore, you'll need to keep your buyer personas, their journeys, your competition and your relevant keywords in mind. In doing so, you ensure that your ads will be shown to the people who are most likely to take action and interact with your brand.

Context matters in marketing.

It doesn't matter how much you spend on advertising – without properly targeting your ads, any campaign can easily become a money pit. 

Fortunately, contextual targeting allows you to hyperfocus your ad placement, making it significantly more likely that the right person will see the ad at the right time. Because contextual targeting is based on an audience's specific behaviors, a contextually targeted ad is almost guaranteed to be relevant to the people who see them. 

In the end, contextual advertising is all about serving relevant ads to the right people. Most importantly, remember that contextual targeting is about quality over quantity. 

The Role of a Strong Accounting and Finance Team in Seeking Capital

Posted: 28 Feb 2020 03:25 PM PST

Are you looking to grow your business? As part of your strategy, are you putting together the right accounting and finance teams to help you achieve your business goals? 

Most entrepreneurs and business owners are generally involved in the accounting and finance side of the business as a way to save money and sometimes because there's nobody else to handle it internally. As companies seek to grow and expand, a section of the business that often doesn't get enough investment in dollars and manpower is the accounting department. But this crucial aspect of business, regardless of industry, is what separates companies from both a competitive and dynamic perspective.

At SMB Compass, we often see decision-makers choose to spend more on their operations or sales team, as they rightfully require key attention in any business. The challenge is how to acknowledge the gaps (both in talent and systems) you may have in your investment toward your accounting and finance team. 

Appropriate books and records for the stage of your business

Generally, SMB Compass sees this as the one place where most companies will have either a rock-solid system or plenty of room for improvement. Books and records are one of the most important parts of any business. Whether you're looking for a new loan from the bank, seeking to raise capital or planning to sell your business at some point, it is crucial to develop the proper reporting method for your business.

To determine how complex (expensive) of a system you need, the most important factor is where you are in the life cycle of your business. If you're in a fast-growing situation, the right strategy is to build for where you're expected to grow as long as your forecasts and expectations are realistic. All the time, we see companies that grow too quickly and have an exciting story that lenders would love to be a part of, but unfortunately, the company is unreliable in procuring a simple income statement or balance sheet.

At the same time, it's important to understand how to scale appropriately, without spending thousands of dollars on tools that may be too robust for your business. With the proper systems in place, your accounting department can shine.

 

Editor's note: Looking for accounting software to help your finance department? Fill out the below questionnaire to have our vendor partners contact you with free information.

 

 

Why proper reporting matters beyond a capital raise

Before we focus on the reasons why a strong finance team is important in a capital raise, let's talk about why it's important for your business. SMB Compass preaches "efficiency by way of transparency." In all our processes and systems, we focus on accountability. A strong financial team leads to a more profitable, stable company, as you'll understand how the various aspects of your business impact your bottom line. Foresight and forecast abilities directly impact your business and the direction it will take in the future. It's much easier to understand future expenses and how they will ultimately impact your bottom line when you can close month-end and year-end numbers in a timely and accurate fashion. 

A strong accounting department can also prevent a lot of mistakes and mishaps. Many companies with a strong reason to exist are ultimately derailed by their inability to identify and improve on their accounting issues. As a business owner or key decision-maker, you should be able to review financial numbers in timely manner to achieve your goals. Weak financial data skews your decisions and actions. You can only make proper decisions for all aspects of the business if you have accurate data points. Your company's ability to report your finances appropriately is tied to the systems and people: If one is weak, the other will suffer.

The impact of your finance and accounting teams on your ability to seek capital

Lenders care about your financial reporting abilities. This should be obvious and common sense, yet we still see situations across all industries and business sizes where it seems like companies don't care about their financial reporting.

There are many reasons why a company would lose sight of this. For a business owner or key decision-maker, it's easy to take your eye off the ball and focus on other important parts of the business. Finances and accounting aren't the sexiest parts of the business. How do you focus on your finance department when you're rolling out an exciting new product to your clients in the next quarter? There's a million similar examples of situations that take away from the focus on your financial statements. A lot of business owners know the importance of it but still lag behind in improving their accounting and finance side. They may continue to see success, but this success is somewhat limited. Let's focus on one particular area where this limits you: seeking a new lending relationship to help grow your business.

Lenders across the board rely heavily on trust. While there's a ton of other factors in underwriting and qualifying for a loan, we're all human; we go off of our gut instincts for decisions big and small. Similar to our earlier statement of data impacting decisions, data impacts trust. How it impacts it is determined by the quality of your accounting and finance units. In situations where there's pristine and clear data (even with financial losses), lenders can find comfort and trust in what they're looking at. The presentation of data, the timeliness of its delivery and reliance of the numbers help build a trust that makes decision-makers at lending institutions feel comfortable lending money. With better reporting and strong accounting teams comes a higher possibility of financing options. This also means that you're most likely working with a lower cost of capital. [Looking for funding for your business? Check out our picks for the best small business loans and financing options.]

On the other hand, if the financial data provided has many holes in it, took months to procure or doesn't reconcile, the likelihood of finding comfort with a lender will be very low. There are options, like invoice financing and equipment financing, that can still provide the capital solutions you need, but they may come at a much higher cost, some of which actually exceed the costs that companies try to cut by understaffing and not investing in their finance departments. As with everything, there's a balance and also a simple art and science to your finance department. You as the business owner or decision-maker understand your business better than anyone. There are times when new $20,000 accounting software is necessary, but other times when hiring the controller with experience in your industry might matter more.

The most important approach is to have self-awareness and the transparency to determine if you're investing appropriately in this crucial part of your business. This decision has ripple effects on your profitability, your ability to borrow money, and your overall level of stress on a daily basis.

How to Build Trust With E-Commerce Customers

Posted: 28 Feb 2020 11:33 AM PST

Today's e-commerce environment is very competitive. The e-commerce market is continuously growing not only in the U.S., but also worldwide.  Recent e-commerce statistics from Statista show that e-commerce sales in the U.S. totaled over $158 billion in 2019's fourth quarter. Statista also reported that online sales make up one-tenth of total retail, and online retail makes around 5% of the annual e-commerce revenue in the U.S. Globally, online retail sales totaled $3.53 trillion last year, with projected revenues of $6.54 trillion by 2022.

Indeed, online shopping is the trend nowadays. Young consumers (i.e., Generation Y and Generation Z) particularly prefer to shop and interact with retailers online, because they grew up in the digital era. Many consumers ask for their peers' suggestions on social media sites or look at online reviews before making a purchase. E-commerce today has become a social commerce environment.

The fast-growing and competitive e-commerce and social commerce market provides both opportunities and challenges for SMBs. On the one hand, you can advertise and sell your products online via multiple channels, such as your brand's website and social media sites, to customers in different parts of the world. Positive electronic word of mouth (eWOM) over social media can also help you strengthen your brand name, acquire new customers and grow your business.

On the other hand, there is vast competition in the market. Today's consumers can easily compare products and prices online and read reviews to see what actual customers think. To thrive in such a competitive environment, you really have to build online trust for your brand with customers and maintain positive customer relations. 

Trust is the cornerstone of customer relations in the e-commerce market. Compared to in-store shopping, consumers encounter more uncertainty when they shop online for several reasons:

  • Some consumers are concerned about credit card security and privacy issues when they give out their personal information online.
  • They can't physically see or touch the products. Sometimes, the products they receive are not quite what they expected. 
  • They need to wait for the products to be delivered to them after placing an order. 

Because online shoppers face these uncertainties, they only want to buy products from the online vendors they trust. But how do you build online trust with customers? Based on my research and consulting experiences, I would like to make the following suggestions.

1. Protect your customers' data security and privacy.

I conducted focus group interviews with online shoppers and asked them how they determine whether to trust an online vendor or not. The most popular answer to this question concerned security and privacy issues. Consumers want to make sure that their personal data, especially credit card information, is closely guarded. They don't want their credit card numbers to be stolen.

Some consumers only shop on sites they know are secure. To protect your e-commerce website and customer data, you can use a trusted e-commerce platform, adopt cybersecurity software, and train your employees on best practices for cybersecurity and privacy. [Are you looking for a trustworthy platform to host your online store? Check out our picks for the best e-commerce platforms and shopping cart software.]

2. Reduce uncertainties and live up to your customers' product expectations.

Provide detailed, accurate information about products and delivery time to make sure your customers' expectations align with the product they receive. For example, you may want to provide details about materials, size and care instructions for clothing items. For electronics, you could provide instructions for using the features and functions. 

In addition, the picture must present the product as accurately as possible. If the picture of the product is enlarged to show detail instead of representing the actual size of the product (such as a pendant), you should note this on the product page. You may also post product videos on your company website and social media sites for some product categories, such as tech products and electronics. Videos can give your customers a better sense of the products' features and how to use them. 

3. Foster positive electronic word of mouth for your company, brand and products.

Today's consumers rely on each other's opinions to make their online purchase decisions. As I discussed in this article, consumers may look at business review sites to evaluate the company or product ratings or ask their social media friends for product recommendations. Many consumers would rather trust their friends and other consumers' opinions than advertisements and promotional materials. Thus, you have to foster positive eWOM for your company by providing high-quality products or services, engaging with your customers, and offering effective customer care via customers' preferred channels. Positive online reviews and ratings can help you build online trust with consumers. 

4. Enhance your website design.

Consumers feel that poorly organized sites are not trustworthy, so you want to make sure that your company website is professional, up to date and well organized. It should be easy for your online customers to navigate your e-commerce site and find the products they need. You need to present your products in an organized way and provide accurate, current information on them. Check your website regularly for dead links and remove them to ensure all the information customers find on your site is up to date. 

As discussed in a business.com article by Chris Christoff, you also need to reduce friction on your e-commerce website and provide a seamless checkout process for your online customers. Recent statistics show a shopping cart abandonment rate of over 69%. As Christoff suggested, you can increase your site speed, offer multiple payment options, improve your website design, simplify the sales process and make your site mobile-friendly. With a well-designed website, you can generate leads, increase sales, and build trust with customers by giving them a painless online shopping experience.  

5. Work on your content marketing.

You can create and distribute relevant and valuable content to increase your brand awareness and credibility, attract new customers, and engage with your existing customers. You could post informative content such as research articles, infographics, webinars, videos and podcasts on your business's website and social media. Videos are a particularly good way to teach your customers how to use your products. 

The content of your posts needs to be original, up to date, informative, educational and relevant to your audience. With credible content, you can demonstrate your thought leadership in your industry, enhance your company's credibility and build your audience's trust for your organization.  Never plagiarize articles from other organizations' websites; you need to respect other companies' copyrights and the original authors' intellectual property. If your audience finds out, it will be a big breach of trust. Strong original content can definitely help you build online trust with your key audience.

In conclusion, trust is one of the most important factors of customer relations in the online environment. It's imperative for your e-commerce company to build online trust with your target audience by protecting your customers' data security and privacy, making your customers' expectations real, fostering positive eWOM, enhancing the quality of your e-commerce website, and utilizing content marketing. 

Loans You Can Get with Bad Credit

Posted: 28 Feb 2020 09:30 AM PST

  • Borrowers with good credit can usually access bank loans with favorable terms and low interest rates.
  • Less creditworthy businesses might have to turn to alternative lenders that offer more expensive financing options.
  • Using financing to stabilize your business and repair damaged credit scores is possible but risky.

Every business needs funding, and many turn to loans. Unfortunately, not every business has the sterling credit required to receive a loan from a bank with favorable terms and low interest rates. If your business doesn't qualify for a bank loan, where else can you turn?

There is an entire industry of alternative lenders that aim to fill the gaps where banks are unwilling or unable to lend. However, accepting money from alternative lenders requires business owners to be savvy, lest they dig themselves deeper into debt.

What do lenders look for when considering a business loan?

When many businesses require funding, their first stop is the bank or some other conventional lender, like a credit union. These financial institutions offer a variety of financial products, including term loans and SBA 7(a) loans.

What does it take to qualify for a loan from a conventional lender? Typically, these financial institutions look for several things, including:

  • Credit score: For a business, there are two types of credit scores that matter: your business credit report and your FICO credit score. 
    • A business credit score is tied to your Employer Identification Number (EIN), which can be registered with Equifax, Experian or Dun & Bradstreet. Each organization has its own method of calculating business credit scores; for example, Experian considers factors like credit utilization, size of the business, length of time in business, public records and the owner's personal credit score to calculate a score ranging from one to 100. 

    • A FICO credit score is your personal credit score, which ranges from 300 to 850. The FICO credit score is tied to your Social Security number and is calculated by three credit reporting bureaus: Equifax, Experian and Transunion. A FICO credit score is calculated using several factors, including debt repayment history, outstanding debts, length of credit history and whether you have any new lines of credit open. 

  • Debt-to-income ratio: Your debt-to-income ratio is a percentage that expresses how significant your required debt service payments will be in comparison to the money you bring in. For example, if you owe $30 and your income is $100, your debt-to-income ratio is 30%. Generally, lenders will look for a debt-to-income ratio in the mid to low 30s, though sometimes businesses with a debt-to-income ratio up to 43% can be approved for a loan.

  • Cash reserves: At a bare minimum, lenders want to see businesses maintain several months' worth of expenses in cash reserves. Depending on the lender you are working with, they might expect three months of cash reserves to be kept on hand, while others prefer six months or more. Cash reserves assure the lender that even if unexpected expenses arise or a slowdown in sales occurs, your business can still cover loan repayments.

  • Collateral: Lenders will also consider the assets your business holds as collateral to back the loan in the event you don't have money available to make your payments. Common assets used as collateral include equipment or machinery, land and other real estate.

As part of your loan application, you will likely have to provide several months' worth of bank statements so lenders can understand your business's cash flow. However, few elements are as important to a conventional lender as a business's credit score and the personal credit score of the owner.

 

Editor's note: Looking for a small business loan? Fill out the questionnaire below to have our vendor partners contact you about your needs.

 

What is the credit spectrum?

Lenders look out upon the vast sea of potential borrowers and see a credit spectrum that ranges from very bad to very good. Depending on a business's position in the credit spectrum, certain types of funding might be unavailable to them. Businesses with great credit can usually obtain long-term loans at low interest rates, but less creditworthy businesses might have to pursue more expensive and risky funding options.

"On the one hand of the credit spectrum is someone who can walk into a major bank and borrow money on the business's credit, not a personal guarantee," said James Cassel, co-founder and chairman of Cassel Salpeter & Co.

Those borrowers can expect low interest rates ranging from 2% to 5% on a term loan. Of course, Cassel added, that's only true for "stellar businesses with great history."

"On the other side of the rainbow are businesses that can't get money from any kind of institutional lender," Cassel said.

And just as there is a broad spectrum of credit scores for potential borrowers, there is a spectrum of financial products. Some, like bank loans or SBA 7(a) loans, are available to creditworthy borrowers, while businesses with decent credit might require a guaranteed loan.

What types of business loans can you get with bad credit?

What can businesses with bad credit do when they need funding? If their credit history isn't good enough to obtain a loan from a conventional lender, businesses often turn to other types of financing, often provided by alternative lenders or private lenders. While the flexibility and speed with which these loans can be approved are useful to borrowers with bad credit, the terms can also be restrictive and the loans expensive.

"The further down you are in the credit funnel, the worse the rates are," Cassel said. "With great credit, it could be 5%; with bad credit … it could be the equivalent of 40%."

Some of the most common loans available to businesses with mediocre or bad credit scores include:

  • Short-term loans: Short-term loans include both term loans that are repaid in three years or less, as well as lines of credit repaid within one year. Businesses with good credit will also leverage short-term loans because of their low cost and easy approval process. For businesses with credit issues, short-term loans can be useful because lenders often prioritize cash flow over credit score. So long as you have enough revenue and reserves to support a short-term loan, a lender will likely approve your application.

  • Hard money loans: Hard money loans include several different types of loans that are backed by a collateral asset rather than a credit score. Most often, the assets used as collateral are real estate, such as a building or plot of land. A bridge loan, for example, is a type of hard money loan that is often used when redeveloping a property. The loan is secured by the value of the real estate upon completion of the project, allowing the lender to foreclose on the property if the borrower defaults on the loan.

  • Invoice financing: "Factoring," or invoice financing, isn't truly a loan. Rather, a business owner essentially sells their accounts receivable to a factor at a reduced rate (typically ranging from 70% to 90% of the total value.) Once the outstanding invoices have been sold, a factor typically begins collecting the payments owed directly from your customers. Invoice factoring can be useful for seasonal businesses or when you need growth capital. However, using this option to cover operational expenses is a risky maneuver. 
  • Merchant cash advance: A merchant cash advance is also not technically a loan. Instead, it is a form of financing that is backed by credit card sales (or sometimes just revenue in general.) Based on your sales volume, a lender will offer a lump sum payment in exchange for a portion of every credit card sale until the loan (plus fees) is repaid. Merchant cash advances can be very expensive and are considered a financing option of last resort.

Before accepting any type of funding, do your homework. Research the lender thoroughly to ensure they are a reputable brand and not a predatory lender. Closely review any agreements before signing; have your attorney and accountant review them as well, if possible. Only accept money that you can realistically pay back in the specified time. Otherwise, financing could expedite the demise of a financially troubled business.

How to qualify for a short-term loan with bad credit

Short-term loans are a type of small business loan that closely resembles a conventional term loan in many ways. Short-term loans carry an interest rate and require repayment of both principal and interest within a certain period, just like a bank loan. However, because the term is less than a year, short-term lenders are more concerned with a business's cash flow than its credit score.

"Banks ask for all types of collateral, and personal credit is very important to the bank," said Michael Baynes, co-founder and CEO of Clarify Capital and a  business.com community member. "What's important to us is cash flow [demonstrated] through six months of bank statements. If we feel [a business's] bank balance can support our funding over the next four to 12 months, we're comfortable lending to them regardless of personal credit score."

Generally, Baynes said, alternative loans require a one-page application along with a minimum of three months of bank statements. That's all an alternative lender needs to approve or deny a potential borrower's loan application. But what exactly are alternative lenders looking for in a loan applicant?

"The most common reason we reject an application is due to a business being overleveraged," Baynes said. "If they already have existing debt ... and we feel additional payment would overleverage them, we would turn the business down.

"The other reason an application would be declined would be low revenue and low daily bank balances," he added. "We need to see $10,000 to $15,000 per month in revenue or deposits. If they struggle with overdrafts or negative days in their bank account, we're not confident they can make the payments."

The approval process for these types of alternative loans tends to be much faster than conventional banks, which generally take weeks or months to approve or reject a loan application. If approved, funding for alternative loans can often be delivered within a few days at most.

To expedite approval, it's important to maintain good financial documentation. According to Cassel, keeping detailed, accurate books is one of the most important things a business can do.

"Make sure your financial house is in order," he said. "Every business needs to have monthly financials. They need to be available no later than 10 to 15 days after the end of month. Some businesses don't get them until 90 days after the month. Then you're 90 days further in the hole, and it's too late to correct it."

Good books not only help you avoid financial trouble, but they give lenders the insight they need to make a decision as to whether or not to extend financing to your business.

How can you begin repairing bad credit?

There are advantages to repairing a damaged credit score even if you do qualify for funding. According to Baynes, an improved credit score can avail your business to better terms and rates. While rebuilding credit can be a long and arduous process, you should do so if your financial situation has stabilized.

"Obviously, first and foremost is staying current on your personal credit payments," Baynes said. "These are things like auto loans and credit cards. Maxed out credit cards drive down your credit score. Missing payments or just making minimum payments brings down your credit score tremendously."

According to Cassel, business credit rehabilitation can be extremely difficult and requires a detailed plan. While maintaining your personal credit score, you also need to keep an eye on your business's debt service.

"When businesses get into trouble, they should put together a 13-week cash flow [projection] of expected funds in and expected funds out," he said. "This helps them manage cash and decide what to pay for."

There are some ways a business can seek relief to help stabilize their financial situation as well, such as raising prices. Many small business owners are reluctant to raise prices, Cassel said, because they are afraid of losing customers. In many cases though, there is more room to hike rates than entrepreneurs realize.

Businesses can also ask suppliers to extend payment schedules. If you are a good customer who has remained current in the past, a vendor is likely to work with you; after all, they don't want to lose you as a customer.

If you've partnered with a lender before, they might be willing to lend a bit more to your business if they see you are legitimately on the road to financial rehabilitation. This is known as an "airball," Cassel said. If things become truly dire, a business can usually call in a restructuring firm to reorganize how the business operates.

"Sometimes it is a vicious cycle that is impossible to get out of," Cassel added. "As things get worse, the cost of borrowing goes up, so you have to figure out how to stabilize the business. Once you stabilize, you can focus on repair."

Unfortunately, when financial troubles become pervasive enough, there are times where business owners have to reckon with a hard truth many entrepreneurs find difficult to face. The best option, Cassel said, is sometimes to cut your losses and stop the bleeding.

"You've got to look at the viability of the business," he said. "Business owners have to be honest with themselves about long-term viability."

Ultimately, securing financing should be a way to get your business to a better place in the credit spectrum. That way, the next time you need funding, you can successfully pursue a financial product with better rates and more favorable terms. If financing doesn't support that type of forward progress, then it could just be digging your business into a deeper hole. For struggling businesses, Cassel had this advice:

"Be honest, try to get a loan and, ultimately, get back to a better lender," he said. "Some businesses never do, and owners start to feel like they're working for the bank."

Financing can be a great tool in an entrepreneur's toolbox, but taken irresponsibly or out of desperation, expensive loans can be the death knell for a cash-strapped business. Always have a plan for any money you borrow and keep an open line of communication with your lenders. If you do, you could be well on the road to repairing your credit.
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