Now you know why many businesses are suffering. In most cases are due to the slow growing of their business.

Below are the top 5 reasons why small business cannot grow:

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Recession is really a word that can make people worry. However, if you are doing well in your personal finance, you won’t worry that much about this. In fact, recession also has its own benefits.

Let me show you the benefits:

1.    Recession makes people frugal. One of the reasons people worry about recession is because their personal finance is not strong enough to fight with recession. The good news is worry can make people change. Many people will learn the lesson and be more frugal.

2.    Recession helps people think about their finances. I hope that people can learn their lesson from a recession. If you are worried about recession, this is because your personal finance is not recession-proof enough. So you have to sit down and think properly what you should do to manage your money in a better way. At least you can prepare for the recession in future.

3.    Low Interest Rate. In order to help the market, Federal Reserve has already cut down the interest rate several times. If you read my article Federal Reserve Interest Rate Cut and Your Personal Finance, you will know its effect on your money. At least, credit card and mortgage interest rates will drop and this is good news for a lot of people.

4.    Inexpensive Stocks. For some investors, recession can be good news for them. Stock market drops badly during recession period. So investors will jump into the market and buy those low cost stocks. When the economy goes back to normal, the stock price will raise and they make money from this. This is a cycle of generating wealth.

5.    Great Deals on the market. Just like stock market, many things in the market will be affected and drop in price. So if you are well prepared financially and have plenty of cash, you can get a lot of great deals on the market. Currently housing market is dropping. You can pay attention on it and you might find 1 or 2 good deals for your real estate portfolio. 

6.    Win your business competitors. I don’t really wish to say this but this is the time you can beat your business competitors and stand out the crowd. Many businesses are slow or even closed down during recession. So if you can do something to boost and maintain your business, you will win your competitors and stand out in the market.

Recession can be good or bad

Like most of the things in this world, recession can be good or bad. In fact, I heard before that recession or bad economy period is a time of wealth exchange. Some people will be poorer but some people are getting richer. This is all about your financial literacy and how well you prepare your finance for this tough time.

Just like our body. It is more important that we protect and keep our body healthy. Once we make it, our body will hardly get sick. In most cases, prevention is the best. 

So let’s take some simple steps to prevent ourselves from suffering financially during recession.

11 Steps to Prepare for Recession

For Your Personal Finance:

1.      Keep and Save an Emergency Fund. Emergency fund is the most basic requirement that you must do in order to proof your finance against any financial disasters. It is recommended that you save at least 6 months of your living expenses as your emergency fund. However, if you are tight in budget, you should at least reserve 1-3 months of emergency fund for recession. The more you save, the more security you have during recession period.

2.      Spend Wisely. Start a budget and spend your money wisely. Try to live below your income and not your credit. If recession really happens, you will need to tighten up your budget so that you have more money each month to pass the hard time.

3.      Reduce Your Debt. I always recommend people around me to reduce their debt as much as possible especially credit card. Debt is just like a bomb and it can burst anytime and ruin your life. It is ok if you are having a job or income to support it. However, it will be a nightmare for you if you are downsizing or in the recession period. So reduce it and make it under your control.

4.      Keep an Eye on Your Investments. If you are investor, you may want to put at least some of the nest egg in a safer place. Recession usually hurts stock market. Nowadays, real estate market is not really stable as it is one of the causes of recession. So maybe you should retreat your money from those 2 investments options. Bonds usually do better in recession and it might be a good choice for you.

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Recession is a normal economic cycle that happens from time to time. In my article, Understand Recession in Simple Language, I said that the main reason that caused recession is the fear of people. Once something happens on the market and makes people worry about their financial future, they will stop spending money and hence activate the economic chain effects until recession happens.

What has actually happened that make people worry?

This is the issue that we are going to discuss below…

Reasons that caused the great American Slow Down

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You will see and hear the phrase recession a lot from the newspaper or other broadcasting media in America. This is because there are a few economists predicted or even claimed that America is already in recession. This has been a hotly debated issue among the economists for months.   

Recession is a word that makes a lot of people worry, isn’t it? However, no one can really say that America is in recession, so are we. In fact, we should not care about how others have said about it. We should learn how we can “see” it through our own eye and analysis. Then we should learn how to survive financially in the recession period. Recession-proof on our personal finance is the most important job that we must do right now, no matter recession happens or not. But before we do so, we must understand some basic about recession.

What is Recession?

Recession is a period when nation’s economy is slowing down. Conventionally, we only can declare we are in recession if the slowdown has continued up to 6 months. It is just a normal business cycle and natural phenomena in economy. Every thing that hits the highest point must go down before it can hit the new level. If you read the stock market chart, you will understand this theory very well.

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One of the myths that I learned about real estate is your property doesn’t increase its value according to your investment. What does that mean?

For example, you stay in a house for 4 years. Now it’s worth $180,000 and you want to sell it. You would like sell at higher price by increasing your home’s value. You take out $20,000 to do home improvements and try to sell your house at $250,000. You sell higher because you think that your home improvements have increased the home’s value tremendously. However, at the time you only get offers at $190,000 from the market. You feel strange and don’t know what has happened.

Yes, theoretically home improvements should increase your home’s value. However, in reality, it is not 100% sure that it will hit your expectation or even pay back what it has cost you. This is because not all home improvements are created equally. Again, home improvements are considered as some kind of investment which has some risks.

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Do you ever care about your employees’ satisfaction?

It is a big challenge to run a business especially if you want to make your business become profitable and success. A business is challenging because there are a lot of factors involved that will affect your business. This is why people always use the word “volatile” to describe a business.

There are many things you have to take care in your business such as customer satisfaction. You will find that many reading materials discuss about customer satisfaction and how it can help your business. If you are running a business, have you ever care about your employee satisfaction besides customer satisfaction? I believe not many of the business owner care about this. Let’s discuss the issue.

Employee Satisfaction is as Important as Customer Satisfaction

We all agree that customers are important to a business because they are paying money to business. They are the one who generates the income cash flow for a business.

On the other hand, if you think properly, you will find that your employees are also important. They are the one who provides some kind of services, advices and also the one who help you to collect money from customers. So we can say that employees and customers are linking each other.

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I always heard the story that people keep complaining that they don’t have enough money to spend or don’t have any money left at the end of the month. They are living paycheck to paycheck. But to me they are considered the lucky one because many people are living credit card to credit card. Yes, they are having negative cash flow and have to use their debt to survive.

Actually in most cases, there is something wrong with their cash flow management. There must be something happening in their way to spend money before that caused this cash flow problem. The theory of the law of cause and effect applies here. If you want to know the reasons, you can refer to my article Reasons Why People Are in Debt.

Mind Your Own Cash Flow  

If you read the book rich dad and poor dad before, you will know that one of the lessons that you need to learn is Mind Your Own Business. It is not about starting a business and taking care of it. In fact, the “business” here is your cash flow, your money and your future. Those are the important things for your life.

I always believe that if you want to success in your life, the first thing you must win is in your cash flow game. According to Anthony Robbins, there are 5 things we master and keep them in balance if we want to success. They are:

1. Emotion Mastery – Master the way we feel
2. Physical Mastery – Master the health of our body
3. Relationship Mastery – Master our social life
4. Financial Mastery – Master our personal finance or money
5. Time Mastery – Master the time management.

As you can see, money is part of our success and it can affect other mastery too. Each of them is inter-related. I believe you have heard a lot of stories about how people ruin their relationship because of money or even loss control their emotion due to the debts.

So the conclusion here is Mind Your Own Cash Flow (Business) is the first step to success.

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Lately, I managed to get an audio course for a popular book; the Millionaire Next Door. This is a popular financial book. So I quickly spent my first week listening to the tape and learn from it.

The Millionaire next Door is a good learning material about wealth and wealthy people. The most amazing part of this audio course is it provides all kind of statistic and facts to discuss the spending habits, money mindsets and money behavior of the wealthy people. The course also shows us that most of the wealthy people looked ordinary and normal. However, the people who owned fancy car and biggest house, in reality are broke! They just look like a wealthy people and they are also the one who suffers from money problems.

Currently I almost finished 60% of the audio course and I get a big message that we should concentrate on our wealth instead of how much we make and earn or how many fancy materials we have. There are a lot of benefits becoming a wealthy people. So I quickly did some research on building wealth and I found a new terms for my mind – High Net worth Individual (HNWI).

What is High Net worth Individuals?

We all heard about millionaires, billionaires, rich people and their exotic lifestyles. However, recently, the term “High Net worth Individuals” is being used frequently to describe a person whose net worth is more than $1 million. This figure does not include the first piece of real estate owned by individual.

Needless to say, HNWIs know something about making money, managing money and growing their wealth. In fact, they accumulate their first million by sticking to some simple rules and formula. If you do the same thing, you also can become a High Net worth individual.

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