Advice From David Bach
Pay yourself first—and that means 10 percent of each dollar earned.
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Set up your finances on line. It takes less than an hour to automate your finances; doing this will ensure that you do pay yourself automatically, self-discipline or other challenges notwithstanding.
Build wealth by using the profits from your business to buy real estate. You’ll save considerably on rent and potentially earn the extra income through leasing space to buy or build another business.
Begin with the end. Have an exit strategy. Do you need to diversify into other businesses to have a saleable business? Or, if you are going to sell yours, be clear on the multiple on which you will sell it, e.g., gross revenue or EBITDA (earnings before interest, taxes, depreciation and amortization).
Think franchise. It’s not uncommon to hear about a doctor who owns a chain of dry cleaners. Remember businesses that rely on a solo-preneur’s expertise may not be saleable. Diversifying into a franchise provides you with additional revenue channels day-to-day and/or in the future when you may want to retire and sell that business.
Use the power of technology and the Internet. With Twitter, Facebook and other business web sites, selling products online requires little investment and additionally enables you to advertise virally.
Set up adequate emergency accounts—both business and personal, but keep them separate. You’ll need six months to one year of expenses in a money market account.
Advice From Clarky Davis
With more than 10 years of personal and professional experience in debt management, Davis said she personally overcame debt and learned to live within her means while paying it down. Her The Debt Diva’s Frugal and Fabulous Lifestyle Guidescover topics from basic money management and budgeting to real-world saving tips.
Be prepared for the business not to make a profit for at least one year. Have enough money saved up to overcome this.
Keep overhead low and service high. Consider starting the business from home—for women perhaps a shop-out-of-your-home clothing line or for men or women a computer consulting firm.
Be informed. Learn the laws and regulations regarding you business. This includes taxation and licensing requirements.
Know your options. Be sure you understand loan payment terms—and the consequences or options if you fall behind on your payments
If you’re married or in a relationship, make sure one partner continues to work full-time while the other starts the business. This will help you cover healthcare and keep you afloat financially.
Be willing to learn from others. And this includes learning from their mistakes.
Make borrowing from your 401(k) an option of absolute last resort. With life expectancies increasing, you’ll need to rely on your retirement dollars for many years. Build them regularly and safeguard them always.
Advice From Roni Lynn Deutch
Roni Lynn Deutch, The Tax Lady, who grew her condo-based law firm into a national operation with 14 attorneys and a 100-person plus staff, calls allowable tax deductions “sexy.” She said smart business owners are “tax sexy” and understand all tax deductions. Like Bach, she said she sees 2010 as the beginning of great opportunity—the beginning of the decade of the entrepreneur.
Sell assets that are loser stocks then invest the cash in starting a business. With banks not loaning money, entrepreneurs need to find other ways to raise capital.
Look to your existing retirement accounts as borrowing vehicles that will help you start a business. You can borrow up to $50,000.
Learn the difference between sole proprietorships and S corporations.
Take advantage of the now-low rents for retail space. For those who need and want to run a business outside their homes the rent is at an all-time low to open a business.
Once started, run your business from the top down. Be aware of all aspects of your business and for tax purposes, dollars in and dollars out. How well the organization is doing is a reflection of the business owner.
Be organized and keep and file all receipts. This will enable you to have a good understanding of your expenses. Failure to do this can result in tax overpayment or penalties.
Have a basic knowledge of tax laws. For example, know the ins and outs of deducting home office and transportation expenses and the Self-Employment Tax. Information and know-how enables you to control your destiny—particularly in challenging situations with the IRS.
Own at least one good tax book.
Understand the benefits of hiring teenagers. If you need an extra hand, and you’re operating as a sole proprietorship, wages to employees who are under 18 are exempt from FICA taxes.