Survival Tactics for Small Business Owners

Excerpt from Safe Money in Tough Times by Jonathan Pond

December 15, 2010

My friends who work for giant corporations are complaining about how the economic downturn is affecting their personal finances. I should be so fortunate. My business is going through a terrible time. Sales are down, cash flow is weak, and the banks are hardly in a position to lend to us little guys. I’ve never experienced such a prolonged drop-off in business, and it looks as if the lousy business climate is going to continue for quite a while.

Small businesses are really struggling now. For every headline describing the travails of a major corporation, there are hundreds of small businesses that are on the brink. You need look no further than the large number of vacancies in downtown shopping areas and suburban strip malls in every region of the country.

A DOUBLE WHAMMY
Small business owners face a double whammy during an economic downturn. They have to keep both their business and their personal finances afloat. A big risk that small business owners face in a slowdown is that they will jeopardize their personal resources in an attempt to keep the business going. If that action fails, they could end up in serious financial trouble. Many business owners don’t see their personal financial life as being separate from the business, even in the best of circumstances. When push comes to shove, they will gladly use their personal investments and retirement accounts, borrow against their homes, and cosign additional business loans to keep the business going. The risk of doing this is obvious, but small business owners are inherently risk takers anyway. If you own a business or are a self-employed professional, the next section will discuss some strategies that may help you cope with the financial problems that plague many businesses and professions during a slowdown. It is followed by a discussion of the inevitable interrelationship between the finances of the business and the personal finances of its owner. If you are thinking about going into business for yourself, the concluding section offers some advice.

TAKING CARE OF BUSINESS
One key to dealing effectively with the recession’s financial adversities is to anticipate problems and take action before it’s too late. (see pdf for complete article)