Anyone who owns a homebased business knows that money tends to
come in the door in cycles. When you're experiencing an up
cycle, life is great. You're able to pay all your bills on
time, run a new ad, even put some money away. But when the cycle
turns, keeping your financial ship afloat can be difficult. This is
especially true in the first few years of a new business venture,
when you don't know what your business cycle even looks
like.
The danger in not knowing your business cycle is that at any
given time, your homebased business could take a turn for the worse
and, if you're not prepared, your business could go under. Then
what? You'd be in a worse position than where you started since
you'll not only need to find a job and pay your normal bills,
but you'll need to pay off your newfound business debts as
well.
Fortunately, avoiding this potential scenario isn't
difficult. I want to give you some options--probably some you
haven't even considered--that will enable you to keep the money
coming in, even when your main business is on a slow cycle.
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"Main business, you say?" That's right. Consider
the possibility that you may need to run more than one business or,
at the minimum, have more than one "division" to your
business. This is called having "multiple profit
centers," a term coined by Barbara J. Winter in her excellent
book, Making a Living Without a Job (Bantam Doubleday Dell,
$13.95).
Let me give you an example to show why this idea is so
important: When I began my homebased law practice, I decided I
wanted to specialize in bankruptcy law. So I placed a bankruptcy ad
in the paper and before I knew it, the phone started ringing.
Business, almost from the start, was brisk. Having opened my
business in March, I was in hog heaven by October. Business was
booming.
But then November came. I didn't know it at the time, but
bankruptcies dramatically fall off in November and December. I was
completely unaware and unprepared for this shift in my business
cycle. What was I going to do? Fortunately, I had learned the
multiple business center concept, and before my November crisis had
begun, I had started an alternate profit center: namely, putting on
divorce seminars. So when my bankruptcy business dropped off, I
began to put on more free seminars. I got a slew of new divorce
clients and made it through that crisis. Now I know that November
and December are slow in that one part of my business, so I plan
accordingly.
A smart stock investor does the same thing. He knows not to buy
just one stock. That stock may go up, but it may go down. Having
more than one stock ensures that when one stock does go down, the
likelihood of taking a big financial hit is remote. Having multiple
profit centers offers similar protection for businesses.
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