An Emergency Fund is Part of Sound Fiscal Planning

In personal financial planning, it is recommended that individuials set aside an emergency fund of cash equal to 6 months of living expenses in case a job loss or other interuption of income occurs.

This is great advice not only for individuals, but for business owners as well. I have always felt most comfortable in business with 3 months of operating expenses in reserve and another month or 2 available on some sort of credit i.e.-credit lines, credit cards, etc. These reserves can allow the business to weather any economic storm without reducing the owners personal compensation while he/she rides out the tough times. If the reserves had not been set in place, and the business owner is already managing the businesses expenses aggressively, the only remaining place to cut is owner compensation. For business owners, this should always be a last resort.

In my businesses, the chances of me losing 100% of monthly revenue is very slim. But in these economic times, it is quite possible to have a 30% or more sales dip in one or several months. In those months I thankful I have my reserves in place and that I put a little bit away for a rainy day.

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Some Great Sites to Help Every Entrepreneur

My grandmother used to say an ounce of prevention is worth a pound of cure. I prefer the adage- fail to plan, plan to fail. Every business needs to plan, plan and then plan some more. One way to plan ahead is to do your research. The web is an awesome place for doing research on any business you are considering. The challenge however is separating opinion from fact. I read a blog post where someone said that 4 out of 5 businesses fail in the first 5 years. According to a 2006 report from the SBA, the correct data is that 56% of businesses fail in the first 4 years. One of the best places to get factual unbiased information is from US government websites.

Some great sites that I have used for data, information, research and planning are as follows:

http://www.sba.gov/ Small Business Administration

http://www.commerce.gov/ US Commerce Department

http://stats.bls.gov/ US Bureau of Labor Statistics

There is a wealth of information for every Entrepreneur at each of these sites that will help in the planning and organization of your business. In my upcoming posts, I will discuss some specific resources on each of these sites that I like and have found useful. In the meantime, take a look at each and save them to your favorites. Good planning never goes out of style.

How about a small business bailout

Why isn’t the government talking about a small business stimulus package? The SBA has always been touted as the small business owners friend. I agree the SBA is a great resource for training advice, counseling and local seminars, but for financial assistance the SBA always falls short. There was a recent comment on Fox Business News this week where the morning host had said that” if you can qualify for an SBA loan, then you don’t need an SBA loan”. Maybe it is time for government to create some programs to help the little guy as well as the big. In one of my ventures, I have 17 people who rely on me for their income. I contribute to the local economy, pay my taxes, and do my part to keep the economy chugging along. In tough times like this, my resources are limited for raising additional capital or finding favorable loan terms. Let's take a piece of the bailouts and create some SBA programs that actually help small businesses where they need it most, in their cash flow. I am not talking about a hand out, just less hurdles and more favorable terms.

Auto Bailout, Good Money After Bad

Our government is spending billions of dollars bailing out the financial and automotive industries, I believe in the US capitalist system. Why should we put good money after bad? Where is the accountability? Instead of bailing out all 3, pick the strongest and back that one. The American auto manufacturers have seen the writing on the wall for years regarding green technology, fuel efficiency, and quality control. Let's focus on our areas of strength and find alternatives industries for those areas of the country which would be hit by an auto company closure. Let's invest in America's future and build a better tomorrow.

Are there opportunities in today's economy?

Absolutely, some very successful business started in the worst economic environments. Now is a great time to seize opportunities for goods and services consumers and businesses demand. I knew a gentleman who owned a chain of liquor stores who once said " when times are good,people drink to celebrate, when times are bad they drink to forget, either way times are always good in the liquor business". What do you think are some other recession proof industries?