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William Manchee

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Defending the Small Business - Part 23 - Changing Your Ways
4/7/2009 5:31:48 PM    [ Flag as Inappropriate ]

Once the small business owner identifies his mistakes, the hard part begins--changing his ways...

Once you hire your accountant itís important to do a budget to determine what cutbacks to make. Frequently there will have to be layoffs, salary reductions, and suspensions of fringe benefits. Rent may be too high, which will require re-negotiations with the landlord, or termination of leases and executory contracts in bankruptcy.

If the SBO has been looting the company, that has to come to a halt. If the company has too many employees or simply canít afford what it has, the whole operation of the business will need to be reviewed to determine how labor can be better utilized so that fewer employees will be required.

If payroll taxes havenít been paid and proper procedures for collecting and paying these taxes arenít in place, that situation needs to be corrected immediately. Itís not wise to finance your reorganization with Uncle Samís money. Itís an expensive loan, and one that will only cause you immeasurable grief in the long run.

This is a critical stage in the reorganization process and must be done as quickly as possible, for there has to be a certain amount of cash available to continue operations. If the negative cash flow isnít stopped quickly enough, the business may run out of money and be unable to reorganize at all.

Too often SBOs wait too long to seek legal counsel and the business is too far gone to be saved. It is important to be realistic and seek help at the first sign of trouble. This is another reason an ongoing relationship with an attorney is important. If the company has an attorney that it deals with on a regular basis, it is more likely the SBO will pick up the phone as soon as bad fortune rears its ugly head.

This is the time to take a good look at insurance too. Many SBOs operate without insurance. They think that insurance is a luxury that they will get down the road when they have extra money. Well, if you want to build a successful business, you have to realize a lot of things will go wrong and prepare for those eventualities. If you want to roll the dice and go naked you can, but only at your own peril.
The wise SBO will find a good insurance agent and sit down and figure out what insurance is absolutely necessary and get it in force immediately. In my experience, an SBO should have personal life insurance as well as disability, medical insurance, business interruption, automobile, general liability, workmanís compensation, fire, and extended coverage on his real estate and contents insurance. Additionally, it is wise to get a blanket umbrella liability insurance policy, both personally and for your business.

This sounds like a lot, but if you shop carefully you can often get these coverages as part of a single policy, which will be much cheaper than separate policies. Personal life insurance, disability and medical coverage can often be purchased as a group policy, which is also a lot less expensive than if you purchase each individually.

A good insurance agent can handle all your insurance needs and take care of most of the onerous paperwork involved. Itís a good idea to find an agent who is willing to take this burden off your shoulders and handle claims too, so that you wonít be saddled with this task or have to pay an employee to handle it for you.

I have had the same insurance agent for twenty-five years and, whenever an issue comes up, I make one phone call and it is resolved. Conversely, if my agent becomes aware of industry changes or issues that I should know about, he calls me immediately. If I miss a premium, he gives me a personal phone call to remind me to pay. If you have five different insurance agents, you wonít be a big enough client to warrant special attention and you wonít get this kind of service.

I canít tell you how many times I have been forced to defend clients who thought they had insurance but for some reason hadnít paid the premium. Sometimes they were short on funds, but often it was as simple as forgetting to send in a change of address or the insurance notice getting lost in the mail. Defending a lawsuit can cost thousands of precious dollars that few SBOs can afford. If the lawsuit is lost, the business may be forced into bankruptcy or put out of business.

Insurance is not a luxury. It is a fundamental requirement for anyone who operates a business. Just as a policeman wouldnít go into a crack house without a bulletproof vest, neither should the SBO pass another day without adequate insurance to protect him from the perils of doing business.

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More Blogs by William Manchee
• Why Many Intelligent and Talented People Fail in Business - Monday, May 07, 2012
• Getting the Mail Can Be Risky Business - Friday, May 04, 2012
• Consumers Suffer Grievous Injury When Creditors Improperly Report Their Credit after Bankruptcy - Thursday, May 03, 2012
• The Effect of Print on Demand to the Small Press Author - Monday, July 04, 2011
• Nine-Eleven's Impact on the Small Press Author - Sunday, July 03, 2011
• Has Your Mortgage Company Ripped You Off? - Saturday, August 07, 2010
• Wrongful Foreclosure - Tuesday, February 16, 2010
• Don't Throw Away The Evidence - Friday, January 15, 2010
• Brandy - Saturday, October 17, 2009
• Why I Write in Different Genres - Wednesday, August 12, 2009
• Cash for Clunkers Bad Idea for Many Consumers - Monday, August 03, 2009
• Beware of Debt Negotiators - Tuesday, May 05, 2009
• Top Ten Reviewers - Tuesday, April 28, 2009
• Debt Collector Put Out of Business In Texas - Sunday, April 26, 2009
•  Defending the Small Business - Part 23 - Changing Your Ways - Tuesday, April 07, 2009  
• What Every Bankruptcy Filer Should Know - Part 3 - Will Filing Bankruptcy Ruin Your Credit? - Thursday, March 19, 2009
• Defending the Small Business - Part 22 - Bookkeeping and Accounting - Wednesday, March 11, 2009
• Chill, It's No Big Deal - Sunday, March 01, 2009
• What All Bankruptcy Filers Should Know - Part 2 - Wednesday, February 25, 2009
• Defending the Small Business - Part 21 Form of Business - Thursday, February 19, 2009
• What Every Bankruptcy Filer Should Know - Saturday, January 31, 2009
• Defending the Small Business - Part 20, Getting an Attorney - Sunday, January 25, 2009
• Defending the Small Business - Part 19 - Employees, Double Trouble - Sunday, January 11, 2009
• Defending the Small Business Under Siege - Part 18, Loan Consolidations & Workouts - Sunday, January 04, 2009
• Defending the Small Business: Part 17 - Bankruptcy: Friend or Foe? - Monday, December 29, 2008
• Tarizon: The Liberator Launch Update - Friday, December 26, 2008
• Defending the Small Business - Part 16 - When the Constable Knocks - Friday, December 05, 2008
• Defending the Small Business - Part 15 - State & Local Taxes - Saturday, November 22, 2008
• Defending the Small Business - Part 14 - Dealing With IRS Collections - Wednesday, November 12, 2008
• Defending the Small Business - Part 13 - Uncle Sam, The Sleeping Giant - Thursday, November 06, 2008
• Defending the Small Business - Part 12 It's Not As Bad As It Looks - Monday, November 03, 2008
• Defending the Small Business - Part 11. Misfortune - Tuesday, October 28, 2008
• Defending the Small Business: Part 10. Competition - Thursday, October 23, 2008
• Defending the Small Business. Part 9. Theft & Embezzlement - Monday, October 20, 2008
• Defending the Small Business - Part 8. Greedy Lenders - Sunday, October 19, 2008
• 7 - Defending The Small Business: The Credit Conspiracy - Saturday, October 18, 2008
• 6 - Defending the Small Business - Giving it away. - Thursday, October 16, 2008
• 5. Defending the Small Business: Starting on A Shoe String - Wednesday, October 15, 2008
• 4. Defending the Small Business: Suffocation - Tuesday, October 14, 2008
• 3 - Defending the Small Business: Looting - Monday, October 13, 2008
• Understanding the Current Economic Meltdown - Saturday, October 11, 2008
• 2 - Defending the Small Business - Doomed From Day One - Saturday, October 11, 2008
• 1 - Defending the Small Business: Introduction - Friday, October 10, 2008
• The Stan Turner Mysteries - Sunday, March 25, 2007

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