Now that the Powers That Be in Washington have rallied together (with great effort) to postpone our free fall off the Fiscal Cliff, chances are pretty good that we’ll be standing on the edge of this precipice for most of the new year. Instead of inspiring confidence and security, especially among small business owners, this move will only end up doing the opposite. All of these maneuverings are creating more confusion and unease, and it doesn’t help that the media has been quick to jump all over the “Financial Apocalypse” like kids in a candy store.
So the big question here is how do we, as individuals and as small business owners, deal with it? Before you start seriously considering stocking up on frozen pizza or telling your kids drop out of school; or you start snapping up gold at Bullion Vault, you can use this time to take stock of where you and your business are holding financially. Now that a year has come to an end and a new year is ahead of us, it’s really the perfect time to do this.
To help you along the way, here are a few survival strategies to ponder if you are running a small business given that the fiscal cliff will remain an uncomfortable thorn in our sides for at least another few months:
Invest in your retirement. While you may be sick of hearing how important investing in your golden years is, especially if you are struggling to cover the expenses of today, there is more incentive now. Investing in a 401(k) or a traditional IRA plan will reduce your taxable income. This is important because if we do end up going over the fiscal cliff (whether completely on in some partial way), individual income tax rates will likely increase. You might as well put that money into a future nest egg instead of handing it over to the government. Just make sure you consult with a financial professional to see how much you should be putting aside.
Investing in your current employees. Most business owners may not be thinking about hiring more workers these days. But if you are in a high-growth industry, or your business is experiencing a growth spurt, the decision to hire is only going to get tougher. Not only has there been a shortfall of talented employees within some sectors (mostly in tech), but small business owners also have to worry about the increase on payroll tax (from 6.2 percent from 4.2 percent) as well as the fallout of health care reform legislation.
One thing that is clear about all of this is that you should be investing (time, money, attention- whatever you can) in the development and job satisfaction of your employees. Here are a few posts to look at for more information on this topic:
- How to Get the Most Out of Your Employees Without Breaking Them
- How to Bring Out the Best In Your Employees When Business Isn’t So Good
- How to Set Up A Free or Low Cost Learning Management System in Your Business
If you can’t hire, then become a virtual employer. If hiring a permanent employee is out of your reach right now, then consider hiring a virtual worker. You could end up saving a lot of money this way. BUT, in order to realize this savings, you have to approach the set properly. Check out my earlier post on how to hire a good virtual assistant for more information.
Focus on increasing those profit margins. Obviously, there are two ways to do this: either increase sales or reduce expenses. Neither strategy may be so easy, but that doesn’t mean it’s impossible, either. To get you started, be sure to check out these frugal business tips to see if you can implement any of these ideas in your business, and, see my earlier post on revamping slumping sales.
Research alternative financing. Lastly, make sure you are aware of your financing options- especially among alternative sources. They can help you to smooth out your cash flow and ease some financial pressure, and you may be able to deduct the fees and other expenses associated with these forms of financing from your taxes (just check with a professional to make sure it applies to you and how to do it). Here are two posts to look at on the subject:
- 20 Sites to Help Your Microfinance Your Business or Startup
- 10 Types of Alternative Lending Explained
Setting money aside for later is a real good tip! Filling the retirement bin at the last moment (as you near retirement) isn’t a good idea. It just means you miss out on that accumulated interest over the years, making it harder to grow a nice nest egg. Like you say, invest something, even if it’s small.
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Yes, and it’s an even better tip if income taxes do eventually go up for those earning less than 400k.