Coping With a Loss or Drop in Business Income

by Kori Rodley Irons | More from this Blogger

05 Jun 2007 12:01 PM

It would be lovely if we were in a constant upward trajectory in our home businesses and each month, quarter, or year our income just went up and up and up. But, unfortunately, the world of business just doesn't work that way. For a person who is used to getting a steady paycheck or salary that is regularly adjusted for cost-of-living increases, the fluctuation of cash flow in a home business can be a tough pill to swallow. It can take some adjustment to regroup when there is a loss or dip in income.

Planning can help, and preparing for inevitable fluctuations by having savings. BUT, that isn't always possible, especially in the rocky early months or years of a start-up. Making sure that you keep your expenses low and don't take too much out of the business can also help to make you a little more stable even when things change. Some home business owners find it is necessary to step up work, taken on additional customers or clients, or take a traditional job to cover the family budget when there is a loss of business income.

While loans and line of credit might seem like an easy and logical solution-think hard and evaluate your situation prior to taking on any additional debt. If the dip in income is sustained, or some other unpredictable event further affects your business, it can make it quite tough to pay back that debt and create a major liability for your business. This does not mean that taking on additional debit during a lean time is necessarily a bad thing-but you should take care to evaluate the situation and make a plan for how to pay back debt and get the company in the black as soon as possible.

Try to NOT take any loss of income personally. Unless you've made a major blooper, fluctuations in revenue are rather common in business-especially a small start-up. If you expect that there will be waves, changes, and fluctuations-you'll be better prepared to adjust and ride them out until income rises again.

See Also: Have You Thought About Selling Your Business?

Changing Your Home Business

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