Some of the things you can do include protecting yourself from expenditures made on sudden impulse. We’ve all bought merchandise or services we really didn’t need simply because we were in the mood, or perhaps in response to the flamboyancy of the advertising or the persuasiveness of the salesperson. Then we sort of “wake up” a couple of days later and find that we’ve committed hundreds of dollars of business funds for an item or service that’s not essential to the success of our own business, when really pressing items had been waiting for those dollars.

If you are incorporated, you can eliminate these “impulse purchases” by including in your by-laws a clause that states: “All purchasing decisions over (a certain amount) are contingent upon approval by the board of directors.” This will force you to consider any “impulse purchases” of considerable cost, and may even be a reminder in the case of smaller purchases.

If your business is a partnership, you can state, when faced with a buying decision, that all purchases are contingent upon the approval of a third party. In reality, the third party can be your partner, one of your department heads, or even one of your suppliers.

If your business is a sole proprietorship, you don’t have much to worry about really, because as an individual you have three days to think about your purchase, and then to nullify that purchase if you think you don’t really need it or can’t afford it.

While you may think you cannot afford it, be sure that you don’t ‘short-change” yourself on professional services. This would apply especially during a time of emergency. Anytime you commit yourself and move ahead without completely investigating all the angles, and preparing yourself for all the contingencies that may arise, you’re skating on thin ice. Regardless of the costs involved, it always pays off in the long run to seek out the advice of experienced professionals before embarking on a plan that could ruin you.

As an example, an experienced business consultant can fill you in on the 1244 stock advantages. Getting eligibility for the 1244 stock category is a very simple process, but one with tremendous benefits to your business.

The 1244 stock encourages investors to put equity capital into your business because in the event of a loss, amounts up to the entire sum of the investment can be written off in the current year. Without the “1244″ classification, any losses would have to be spread over several years, and this, of course, would greatly lessen the attractiveness of your company’s stock. Any business owner who has not filed the 1244 corporation has in effect cut himself off from 90 percent of his prospective investors.

Particularly when sales are down, you must be “hard-nosed” with people trying to sell you luxuries for your business. When business is booming, you undoubtedly will allow sales people to show you new models of equipment or a new line of supplies; but when your business is down, skip the entertaining frills and concentrate on the basics. Great care must be taken however, to maintain courtesy and allow these sellers to consider you a friend and call back at another time.

Your company’s books should reflect your way of thinking, and whoever maintains them should generate information according to your policies. Thus, you should hire an outside accountant or accounting firm to figure your return on your investment, as well as the turnover on your accounts receivable and inventory. Such an audit or survey should focus in depth on any or every item within the financial statement that merits special attention. In this way, you’ll probably uncover any potential financial problems before they become readily apparent, and certainly before they could get out of hand.

Many small companies set up advisory boards of outside professional people. These are sometimes known as Power Circles, and once in place, the business always benefits, especially in times of short operating capital. Such an advisory board or power circle should include an attorney, a certified public accountant, civic club leaders, owners or managers of businesses similar to yours, and retired executives. Setting up such an advisory board of directors is really quite easy, because most people you ask will be honored to serve.

Once your board is set up, you should meet once a month and present material for review. Each meeting should be a discussion of your business problems and an input from your advisors relative to possible solutions. These members of your board of advisors should offer you advice as well as alternatives, and provide you with objectivity. No formal decisions need to be made either at your board meeting, or as a result of them, but you should be able to gain a great deal from the suggestions you hear.

You will find that most of your customers have the money to pay at least some of what they owe you immediately. To keep them current, and the number of accounts receivable in your files to a minimum, you should call them on the phone and ask for some kind of explanation why they’re falling behind. If you develop such a habit as part of your operating procedure, you’ll find your invoices will magically be drawn to the front of their piles of bills to pay. While you should maintain a courteous attitude, don’t be hesitant, or too much of a “nice guy” when it comes to collecting money.

Something else that’s a very good business practice, but which few business owners do is to methodically build a credit rating with their local banks. Particularly when you have good cash flow, you should borrow $100 to $1,000 from your banks every 90 days or so. Simply borrow the money, and place it in an interest bearing account, and then pay it all back at least a month or so before it’s due. By doing this, you will increase the borrowing power of your signature, and strengthen your ability to obtain needed financing on short notice. This is a kind of business leverage that will be of great value to you if or whenever your cash position becomes less favorable.

By all means, join your industry’s local and national trade associations. Most of these organizations have a wealth of information available on everything from details on your competitors to average industry sales figures, new products, services, and trends.

If you are given a membership certificate or wall plaque, you should display these conspicuously on your office wall. Customers like to see such ‘seals of approval” and feel additional confidence in your business when they see them.

Still another thing often overlooked: If at all possible, you should have your spouse work in the business with you for at least three or four weeks per year. The important thing is that if for any reason you are not available to run the business, your spouse will be familiar with certain people and situations about your business. These people should include your attorney, accountant, any consultants or advisors, creditors and your major suppliers. The long-term advantages of having your spouse work four weeks per year in your business with you will greatly outweigh the short-term inconvenience. Many couples share responsibility and time entirely, which is in most cases even more desirable.

Whenever you can, and as often as you need it, take advantage of whatever free business counseling is available. The Small Business Administration published many excellent booklets, checklist and brochures on quite a large variety of businesses.  These publications are available through the U.S. Government printing office. Most local universities and many private organizations hold seminars at minimal cost, and often without charge. You should also take advantage of the services offered by your bank and local library.

The important thing about running a small business is to know the direction in which you’re heading; to know on a day-to-day basis your progress in that very direction; to be aware of what your competitors are doing and to practice good money management at all times. All this will prepare you to recognize potential problems before they arise.

In order to survive with a small business, regardless of the economic climate, it is essential to surround yourself with smart people, and practice sound business management at all times.

Author: BPaul

The rest of the country (and world, it seems) has realized that Detroit has incredibly cheap real estate, and plenty of it. Investors – some from as far as away as the U.K. – are buying up lots of houses (for as little as $10,000) to fix up and rent out.

While it might be tempting to buy an investment property for only $10,000, there are at least three reasons to be cautious:

• In comparison to other parts of the country, real estate taxes in depressed areas are high and could get worse. A shrinking population means a smaller tax base, so everyone left has to cough up more money.

• Take your rehab bill and double it. Not because of cost overruns but because your upgrades will walk out the door at night. Theft is a major problem.

• Don’t count on getting government-assisted renters. The easy days of the government sending you the rent check are long gone. According to a friend of mine who has a few rental properties in Detroit, the number of landlords looking for Section 8 renters far outstrips the supply.

With that being said, I believe investing in Detroit is worth considering… as long as you do your homework first. Where else can you buy a house for less than a new car and generate cash flow every month?

[Ed. Note: Whether you're interested in real estate, the stock market, or other investment opportunities, you can get Christian Hill's take in Investor's Daily Edge, Early to Rise's sister publication. Sign up for free right here.

Buying and renting out real estate is just one investment you can profit from in 2009. This June, 9 financial experts will show you exactly how you can make a fortune in today's market. Find out how you can get their top recommendations for making 2009 the best year ever for your portfolio right here.]

Comment on this article

This article appears courtesy of Early To Rise, a free newsletter dedicated to making money, improving health and secrets to success. For a complimentary subscription, visit http://www.earlytorise.com.

There are many ways for a person to become wealthy in America today, however by following these 12 anchors of building wealth, you are increasing your chances of success. Here is a brief summary of the 12 anchors that will lead you on a path to prosperity.

Establish Your Financial Blueprint. This identifies where your finances are today: your income, expenses (and net income), and your net worth (i.e. your assets minus your liabilities). It’s surprising how many people can not tell you their net worth, or really don’t want to.

Establish Your Financial Independence Day. This is your goal – the result you will obtain by following the Wealth Cycle. You identify your expected net monthly income and net worth within a particular time frame. This is the lighthouse that guides you through the investment seas.

Conduct a Gap Analysis. What’s the gap between your destination and your starting point? The Gap Analysis helps you to determine which of the remaining nine building blocks you’ll do next. The process varies from individual to individual, so your sequence may differ from what I show here.

Create Multiple Streams of Income. This is not necessarily including your main job. Ideally, this is a business you created (possibly in addition to your job) that will produce additional cash flow for your future investments.

Entity structuring. To increase and sustain your wealth You’ll need to protect your assets and reduce your taxes by creating tax shelters. For example, entities like LLC’s and S Corporations protect you and your money in the long run.

Build a Wealth Account. You will purchase new assets and start new businesses from the money you have saved in your wealth account. You can manage your debt with other funds, but your wealth account money will be strictly used to buy assets. This will increase your monthly cash flow and your net worth.

Buy assets. Become an asset junkie. Invest directly in real estate, businesses, and even oil wells if possible. By doing so, you’ll increase your monthly cash flow and/or your net worth.

Forecasting. Start living and treating your life like a business. Properly forecasting your financial career will increse your wealth account exponentially.

Manage your debt. Reduce your debt(especially your consumer debt) – not first, but along with building your wealth account and buying assets. Often, your debt payments can be made from the money you earn on your assets, instead of from your paycheck.

Lead your wealth team. Work on your leadership skills so that you are leading your accountant, real estate agent, attorney, assistants, and others. Building your wealth is up to you, so don’t leave it in the hands of others.

Develope a strong mental muscle. All wealthy and successful people have developed a strong mental and emotional muscle. Basically, what keeps most people from becoming wealthy isn’t a lack of opportunity or time– it’s how they think and perceive things. Start thinking like a millionaire, and you’ll soon find yourself acting like a millionaire. Before long, you will BE a millionaire.

Work and Build a team. There is no such thing as a “Self-Made Millionaire.” There are only Team-Made millionaires. All the Donald Trump’s, Oprah’s of the world could not do it alone. They needed a team to get to where they are today.. So go out and build your team of investors, accountants, agents, mentors, and professionals. They will undoubtly get you to where you want to go financially.

So the next logical step for small business owners to acquire cash is to look into a small business loan. This is very tempting for smb owners because a loan will most likely get their business off the ground or grow their business. But take heed, before you head to the bank to apply for a loan, you need to take a good look at the pros and cons in acquiring a small business loan.

First, before you do anything you need to consider these options:

Can you borrow money from family or friends? If the opportunity to borrow money from family of friends presents itself make sure it is on the up and up. You should create a contract, and pay them on a monthly business. When money is involved I have seen many friendships and family ties go up in flames.

Can you finance a loan on a credit card? You probably would need to use your own credit card since you probably have not establish a credit history with your own company. If you have good personal credit and a high credit score you can probably get an interest free loan for a certain period of time before interests start accruing.

Can you cut overhead in certain areas to pare down your expenses? Go back and analyze your business and see if there are any areas in the business you can discontinue or delay until your company is back on its feet. Big companies do this all the time, and their term for it is called layoffs, layoffs, layoffs!

If none of the options above are viable options then going to a bank to acquire a small business loan should be the next step. Don’t get me wrong, many times obtaining a small business loan is not a bad thing and they definitely has its advantages. Here are a few…

Cash in Hand. When money is tight, small business loans can give you the cash you need to get your business off the ground or to expand it. For example, you’re going from being a stay at home mom, to the owner of a consulting business. You will need basic start up equipment, marketing, office supplies, website etc…This can add up and having the cash to take care of all of your start up needs at once can be handy.

Focus. A small business loan can help you focus all of your energies on making profits and getting your business back on track, rather than having to focus on how your going to afford that new brochure and advertising campaign.

Terms. The terms of a small business loan can be long enough that you have the confidence you will be profitable and able to repay the loan on a monthly basis.

However, for every good there’s a bad, for every head there’s a tail, and for every advantage there are disadvantages of obtaining a small business loan…

Interest Rates. You will pay back more than you borrowed. Basically, you are trading money now for money in your business later. Additionally, if you get a loan with a variable interest rate, you could be paying back significantly more than you bargained for.

Credit score. When you borrow money, there is always a chance that you will not be able to pay it back. This can lead to tremendous stress and a deterioration of your business, not to mention it will affect your credit score.

Starting and maintaining a business in the beginning can be an initial financial hurdle, however following your dreams and pursuit of financial independence can be worth the beginning stress and hard work. So take a step back and examine your options realistically and make the best decision for you and your business.