Strengthen the Economy through Productive Spending:  Self Employed, Hard Hit, and Ready for Work

Small businesses are among the hardest hit in this economy; trades-people, local restaurateurs, and providers of services represent at least 30% of the non-governmental workforce in communities.  Every dollar spent wisely, providing work for small businesses, strengthens the economy.

If you are fortunate enough to have secure and steady resources in todays economy consider the power of your spending dollar: 

• Now is the time to tackle home repairs, maintenance, and manageable remodeling projects. 
• Think carefully before canceling yard, housekeeping, or other services. 
• Consider adjusting the scope of service or projects rather than cancelation.
• Structure into your routine an affordable breakfast, lunch or dinner at a locally owned restaurant.

Productive spending is the lifeboat of a sustainable economy.

Perspectives for Small Business: Spring is a great time to launch fresh ideas

The only real safety net for self employed and small business owners is work.  Here are some survival tips for small businesses:

• Ask for the work. Don’t be shy about saying you need work. It’s not a secret or a reflection on the quality of your services; it really is the economy.
• Offer affordable packages of service.  Outline the product and set an attractive price.  Everyone is stressed, minimize negotiations and create more transparency.
• Eliminate unprofitable work.  Small businesses often incur high cost, low profit work for the promise of moving into expanded markets, satisfying ego, or to provide higher levels of challenge.  Keep a clear eye on net income.
• Focus on reciprocal value.  Remember work needs to generate income and the client needs to know they are receiving reliable value.  That balance must be honored. 
• Know how much income is required to survive the year and celebrate every milestone.
• Apply for social safety nets, hardship waivers, and benefits for which your family qualifies. Small businesses don’t have the benefit of unemployment insurance.  Reserves must be stretched as far as possible.  Don’t hesitate to apply for, and pursue, any safety net available; debt relief, tuition waivers and other appropriate social safety nets.

Small business is the backbone of a sustainable economy. Adjusting, persevering, and working through economic change is the signature of small business; the pioneers of the emerging economy.

After thirty to seventy percent losses many investors retreated to cash or cash equivalent. The federal government extended protection by increasing the breadth of coverage through FDIC and offering Treasury Guarantees for participating money market funds. 

Whether your investment dollars are outside the stock market or still sitting in the same accounts that have taken a hard hit; it's time to develop a personal investment strategy. Investor confidence is best demonstrated through thoughtful action based on reliable information. Reliable information is shrouded in market volatility and questions regarding the real value and endurance of historically strong companies. For most self managed investments, inside or outside retirement accounts, having a strategy is the foundation for thoughtful action.

Here is a strategy that is reasonably easy to self-manage.

1. Think of all money as new money.  If you have difficultly getting past losses, consider moving investments to some type of capital preservation account or fund.

2. Use online investment tools to target one or two mutual funds that fit your risk tolerance and sensibilities. 

• Read the most simply stated overview of the fund investment objectives.
• Verify that the management team is stable.
• Check the expense ratio, higher than 1% is a flag.
• Weigh in Morningstar ratings.

3. Decide how much of your investments you want to move back to the market, 10% to 100% of your total investments.

4. Decide how much (dollar amount) and at what frequency (monthly/quarterly) you will transfer to your selected market investments.  This is dollar cost averaging, systematically catching the highs and the lows of the market.

Example:  Total Investment dollars:                                 $100,000

                Amount to invest (dollar cost average):  25%    $25,000

                Systematic allocation to targeted funds               $2,083

4. At regularly scheduled dates transfer allocations to the targeted accounts.

5. As your confidence level changes redo step two and three and adjust your investment strategy.

There is nothing like well planned action to begin the process of moving forward.