Tips to manage your personal financial situation and your small business in a tough economy.
If your financial condition is under pressure due to the prevailing economic slowdown, consider the following ideas to manage your personal finance and your small business smartly to survive through the difficult times.
Tips on Personal Finance during a Slow Economy
- Save money: Carefully study these truly comprehensive money saving guides provided at this link: 8 Money Saving Guides for the American Family These are serious money saving measures to cope up with a tough economy. So invest your valuable time in studying these guides. Implement the ideas that appeal the most to you and which are practically possible in your situation.
- Do smart tax planning: Save on your income tax for the year. Make sure you avail of all the tax deductions that you are eligible for, including medical insurance premiums, higher education costs for the year if your annual income is below $65,000, credit for energy saving home improvement expenses, expenses incurred on investment and tax planning and retirement tax credits.
- Refinance existing loans: In a slow economy the refinance interest rates are much lower than at the time when you may have raised the loan. Consider the option of home equity to reduce your debt obligations. It can help to refinance the mortgage on your home or an expensive auto loan for a much cheaper interest rate.
- Avail the benefits of tax shelters: Increase your awareness about various tax shelters that can save you money on taxes in a perfectly legitimate way. Real estate, oil and gas investments, and appropriately structured equipment leasing costs are some of the common tax shelters available for your income.
Tips for Small Business during a Slow Economy
- Reduce overheads: If your small business is suffering financial challenges due to shrinking demand or over-competition, it may be time to take austerity measures to survive through the tough phase. Reduce staff and put in extra hours yourself. If possible, engage your spouse for extra help instead of hiring staff. Opt for cheaper travel options, reduce gas and electricity expenses and eliminate wastages. Consider moving to a home office in case you are operating from rented commercial premises.
- Negotiate with vendors: If the selling prices are under a squeeze, you need to go back to your suppliers and explain them the situation. Most likely your suppliers would not let your business come under pressure because their sales are also dependent on you. Every penny counts in tough times, so fight for the pennies, and dollars will automatically follow.
- Provide more value for money: Instead of cutting down prices to retain customers, give them more of your product or services for the same price. This does not shrink the overall demand or overall volume of business, and effectively results in better financial mileage than simply reducing the prices and working on wafer thin margins.
- Upgrade your skills: In a slowing economy, you need to work harder and perform maximum tasks on your own. So acquire knowledge about every aspect of your business so that you can reduce dependence on outsourcing of specialized services. Check out the Small Business Association’s free training materials and business tools to counter the effects of a slow economy.
With such efficient planning for your personal finances and small business, you can survive the challenges of an economic slowdown and emerge on top when the economic climate improves.
Watch Video: What to do in Tough Economic Times
Copyright Vikas Vij. Contact the author to obtain permission for republication.
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