Prudent financial planning can help new businesses survive

Texas residents who are thinking about starting a business of their own are sometimes hesitant to walk away from a steady paycheck. Even the most successful entrepreneurs have been known to struggle during times of economic upheaval, but prudent planning and clearly defined goals may help the owners of fledgling businesses to weather the storm and cope when revenues dip and bills begin to pile up.

Building a loyal and enthusiastic workforce can sometimes be what separates the businesses that are able to withstand a recession or economic downturn from those that are forced to close their doors. Employees who feel that they are a valued members of a team may be prepared to work extra shifts or forgo bonuses that they have worked hard for if doing so will help their employers to survive, but business owners who resort to laying off workers at the first sign of financial trouble rarely foster such commitment.

An important part of business planning is anticipating major expenses and obtaining the necessary financing well in advance. Banks are often more willing to make loans to applicants not in immediate need, and business owners who delay may be compelled to risk their personal credit ratings by providing a personal guarantee. The Small Business Administration has programs in place to assist entrepreneurs who require financing to grow or bolster their commercial ventures.

Choosing the appropriate business entity is an important decision for those thinking of starting a company. While a sole proprietorship may be a straightforward way of going into business, attorneys with experience in this area could explain the legal and financial benefits of limited liability companies and corporations. In addition to providing possible tax advantages, forming a corporation or an LLC could protect the personal assets of entrepreneurs from creditors or litigants.

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