I was passing by the television last evening where my hubby was watching “The Big Idea“. I stopped to see who was on and what they were talking about and what I heard astounded me.
Jim Cramer was on talking about the current state of the economy. He said that small business owners should swallow their pride, sell their houses, and move in with their parents, if that’s what they need to do to keep their businesses going, “to keep the American Dream alive”. WHAT?!?!?
I find this kind of advice completely irresponsible. Is this the right advice for some businesses? Maybe. For every business as a blanket statement? Hell no!
First of all, your home is an asset and likely one of the very few appreciating assets you own (okay, not appreciating right now, but down the road). So, you can argue that your business also has value and it’s your future. You might be right or you might be dead wrong and guess what happens then? No house or business… you’re working for “the man” and living with your in-laws.
What would I advise? I would never issue a blanket statement at all. I would review your financials, ask about your business plan, your projections and what they are based on, and then I would dispense advice only meant for you (and likely refer you to some other advisors as well).
Here’s the thing…not every business is worth saving. Just because you have a dream, doesn’t mean you’ll be successful. And just because you have a business, it doesn’t mean it’s the right time or market for that business.
In general, every business owner has flaws. We all have something we aren’t good at and we all need to recognize those weaknesses to be successful. If you’ve reached a point in your business where you need to sell your house to keep the business going, you better have a sure thing on your hands and fully understand why you’ve gotten to this point.
Chances are, it wasn’t just the economy alone that got you to this place. Businesses survive through bad economies all the time…it takes good management. Figure out your fatal flaws and get an expert in that field to give you some advice. Re-think your business plan, fully analyze your business from all angles, and do some forecasting based on historicals, industry trends, etc. Then take this next step…
Figure out your limit. When do you call it a day? When do you swallow your pride and walk away? It’s easy to keep figuring out ways to put more money into a business, but it’s really hard to swallow your pride and admit defeat. I would advise any business owner or potential owner determine what their limit is. Is selling your house and moving in with family on the “okay” list? It certainly isn’t for me.