by Judy Seil
Spend within your budget. Sounds like an easy concept, but where most small businesses get into trouble is when they haven't saved for the rainy day.
It’s hard to believe that when many of us were growing up no one had access to credit cards, and our parents did not buy something unless they had the cash to do so.
Similarly, back in the "old days," businesses could only purchase new equipment with their cash at hand.
Believe me, I am not saying not to borrow money for significant capital investments, but make sure you have the cash flow and rainy day fund set aside to handle those payments should there be a downturn in the economy.
Have you noticed how the number of credit card applications in the mail has dropped?
Most of us threw those offers in the trash; however, those that did not are now having trouble along with the banks that promoted those cards. Commercial banks are finding themselves in a similar situation and raising their credit standards in response.
The SBA 504 program allows companies to purchase equipment with 10% down with fixed rate financing on 40% percent of the purchase. A bank finances the remaining 50%, which reduces the risk for the bank as they only have to finance half of the purchase.
At the end of the day, businesses need to assess their spending much like a family budget, you can only spend as much as you take in and save enough for those days when the roof leaks.
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