Visit Gerry's website for
more coaching ideas in his
"Secrets from the Playbook"
So, you have a great idea for a service, product or business. Now all you need to do is get some startup capital and begin setting up the new enterprise. You decide that all you need is $25,000. for startup expenses and then your business will begin to get off the ground and pay for itself.

But what about living expenses? You reason that the cash flow from profits in your new business will provide enough for you to live on and pay off the $25K.

What are the chances of this happening within the first year of business?

Slim. Or None!

Based on my experience with small business owners, I think people need to save up 2 to 3 years of living expenses as a reserve before starting up a business.

Why?

Because according to U.S. Census Bureau statistics (2003) only 66% of new businesses survive 2 years! And only 40% will last 6 years.

In the meantime you may find yourself subsidizing your business and personal life by using Home Equity loans or lines of credit, using credit cards for living expenses, family handouts and eating Ramen noodles (as one coaching client recently informed me that she was doing).

All of these methods and more are creatively used by many new business owners to survive as they eventually go under through the crash and burn death spiral of increasing debt feeding ever higher interest rates...further increasing the amount of debt!!!

It never ends until there is bankruptcy! With the new bankruptcy laws it may not end there as you may be forced to take chapter 13 and pay off credit card debt.

Look—here’s the deal. Starting a business is tough. There are unforeseen expenses that the best of business plans will miss. You need to give yourself a fighting chance of making your business work by removing the future stress of a limited income.

You can do this by saving 2 years or 3 years of living expenses in an interest bearing account.

Then refrain from taking on a second mortgage, or a line of credit against your home. Also limit your use of the credit card which is nothing more than making a high interest loan to yourself! Talk about shooting yourself in the foot?!

The choice is yours. As Dr. Laura says,"Now go do the right thing."
 

Gerry Schmich


Advertising Info:
For more information please contact
SUMMERTOWN, Inc.
Phone/Fax (970) 225-0771

Website design and management by


© 2004 Summertown, Inc.
All rights reserved. No part of this website may be copied, reproduced, or distributed by any means without express written permission.