From the course: How to Protect Business Profits in a Financial Downturn

Making the toughest decision

From the course: How to Protect Business Profits in a Financial Downturn

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Making the toughest decision

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- The toughest decision for any small business owner to make is whether or not to shut the business down. It's normal during a recession that you might see slower business. And if you start a business during a recession, you're going to have to probably put some of your own money in to get it off the ground. But if you have an existing business and the economy slows and goes into a downturn, you need to be really careful about limiting the amount of money you're willing to put into the business. This is thinking about throwing good money after bad. It's important because many people start their businesses as LLCs, limited liability companies, to limit their liability. But when a downturn comes, many people will throw the thought of liability limitation out the window, and they'll pour good money into a business that might not have the opportunity to recoup those losses. As you think about investing in your own business, you should always be thinking about the return on the investment and the potential to make the money back that you put into a business. I've seen far too many people put money into a business that will not make those returns, that will not recoup those losses. And if that's the case, if you look at your business and don't see the money coming back out of it that you put in, it's a good idea to really limit the amount you put in and think about temporarily or permanently closing your business.

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