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Start Up; Start Up Company
The term Start Up is frequently used but poorly understood. Some people associate the term start up with a particular type of business such as a high tech, fast growing company but that is not always and not necessarily the case. By the same token, some people consider a company to no longer be a start up or in the 'start up phase' once it begins to generate a profit. I reject these descriptions and definitions. A start up is a new business venture that is just beginning to do business, or is a company that is still in the process of raising money with which to begin its operations.
From the credit professional's perpective, start ups are high risk. Why? Statistically, over half of all new businesses fail within the first five years, and a significant portion of them fail within the first year. As a result, extending open account credit terms to a start up company is a decision not to be taken lightly.
© 2009 by Michael C. Dennis. All Rights Reserved. Michael is the author of "Credit and Collection Handbook."