Should You Start a Business in a Recession?
If you’ve ever thought about starting your own business before, there may be no better time than now. A recession tends to bring out the creativity in others and pushes people to take chances that they may not otherwise take. Maybe it is a result of necessity or just a desire to make a little extra money, but the idea of starting your own business during a recession is not such a poor decision as one would think.
Small business is the backbone to the American economy. It always has been and always will. Because every individual has an opportunity to be their own boss and build a profitable business, there is an unbelievable amount of support for helping small business owners succeed. And when you do, you’ll realize just how great it can be to run your own show rather than making someone else rich.
That’s not to say there isn’t any risk with making the transition from employee to entrepreneur. There can be incredible risk involved. Unless your new venture is run during your spare time, you may need to fore go a regular income, take out large amounts of debt, and work tirelessly to turn a profit.
But with the recession comes many opportunities. While credit is tight, there are many markets that can be tapped in to that tend to do well regardless if the economy is hurting or flourishing. The important things to keep in mind are:
- You don’t need to re-invent the wheel. Mimic what has already proven to be a successful and profitable business model.
- Make sure you do exhaustive market research in order to minimize your risks
- Get all of your necessary licenses and make sure there are no legal restrictions
- Create a killer business plan to help you line up necessary funding
One great resource you can access online is Entrepreneur.com’s, 7 Important Startup Steps, which provides you with a checklist and detail on how to go from conception to launching your new endeavor. By following this brief guide and using some of the other resources found on this site, new and existing business owners can get some solid tips on making sure they achieve success.
In: Starting a Business · Tagged with: small business grants, small business loans, starting a business
How to Save $50 a Day or More
When cash is needed, it can often be easier to find ways to save money than to go out and make more money. Particularly when the job market is bad and thousands of college students are scrambling to take any job available, making extra money may not be the easy route. Those who take a moment to truly understand their finances and look where their money is going may be surprised to see just how much they can save every single day.
While $50 may not seem like a whole lot of money, that’s roughly $1,500 a month. That’s a mortgage payment and a month’s worth of groceries for a lot of families. A little bit of savings can quickly add up for you.
By being looking at your expenses and knowing where your cash is going, you can be a smart consumer and find ways to pay less. This does not mean you have to be cheap or cut back on your expenses. By being resourceful and thoughtful about your spending, it is possible to buy the same for less.
The Kiplinger Smart Savings guide breaks down how you can cut your expenses in some of the core areas of your life. This includes areas such as:
- Food and Shopping
- Utilities
- Insurance and Medical Bills
- Gas and Auto Maintenance
- Entertainment Expenses
By being aware of how cash flow (how much is coming in and where money is being spent), many people can quite easily save $50 or more every single day. The best way to get started with this is to print the past three months of your bank and credit card statements. Take a look at where your money is going, and highlight the areas where you could have either done without making the purchase or found a cheaper alternative. You might be pleasantly surprised at just how much of your money you can keep for yourself by being a more responsible consumer.
In: Personal Finance · Tagged with: credit card debt, saving money
What to Do When You Can’t Pay Your Mortgage
When times are tough, many families are faced with having to make tough decisions when it comes to paying their bills. The choice can often be putting gas in the car to get to work or making the mortgage payment. While falling behind in your bills is not a good thing, it can be the wiser decision when faced with having to make this tough choice. It can be a matter of survival and having a good score is not going to help when you have no income.
The scenario is unfortunately common: people have lost their jobs or are suffering as a result of the recession. They’ve exhausted their options, have done everything possible to get a higher paying job in an incredibly competitive job market, and they’re not sure what to do next. The question may be, should you tap into your retirement accounts to pay the bills, or is it better to get behind in payments and ruin your credit.
According to Jack Guttentag, there is no right answer, but often times it’s a matter of missing your payments this money and facing the inevitable, or missing your payments next month. The question may also be a moral dilemma since, as a borrower, you are obligated to make the payments. But if you can miss your payments this month and keep your money to help you get out of a rut, that may be the better long-term strategy.
Of course there are implications to doing this, since it can hurt your credit score if your lender decides to report your late payments to the credit bureaus. However, by delaying your payments you could be buying yourself time to find a higher paying job.
Another alternative for those who are facing financial hardship and don’t have enough money to make their payments, is to see if you qualify for a loan modification. This is the process of re-negotiating your existing mortgage with your bank in order to make your payments more manageable. If accepted, it is important to consider the tax implications that can come with a home loan mortgage modification, and is something you should discuss with a certified financial advisor.
In: Personal Finance · Tagged with: credit card debt, help with bills, help with mortgage