Robert Jackson, who operates a business incubator as CEO of the African-American Chamber of Commerce of Central Pennsylvania in Harrisburg, Pennsylvania, says incubators play the role of mentor to fledgling start ups. Some of these centers specialize in specific industries, while others focus on assisting minority- or women-owned enterprises.

Sheila Mixon, a senior business coach for the Economic Empowerment Center with the Urban League of Greater Cincinnati, helps small businesses locate and apply for business incubator services. Each incubator has its own rules for participation, she says, but in general, successful applicants submit detailed business plans and can pay for incubator office space (which is often subsidized). As an example, the AACCP “charges anywhere from $150 to $500 per month,” says Jackson. A lease generally covers individual office space and shared conference rooms.

Incubators often operate in partnership with colleges, chambers of commerce, and other resource organizations. To find a local incubator, Mixon suggests contacting  your local chamber of commerce, Urban League Small Business Administration office, or the . Of course, businesses that apply for an incubator program must prove they’re legitimate. “They should have the basics, such as a business checking account, registration with the state, and a tax ID number,” says Mixon.  For admission to the program, entrepreneurs must sell their vision to the incubator’s selection committee. They should describe how their company can be profitable, create jobs, and complement the incubator’s goals (such as job creation or advancing technology).

Also, some incubators require entrepreneurs to attend management seminars.  Ashtae Products Inc., a haircare company in Greensboro, North Carolina, partners with North Carolina A&T University to operate the Business & Entrepreneurship Skills Training Center incubator. BEST Center members must take a nine-month course in business ownership, says Michael Woods, Ashtae’s CEO. He explains that “participants have to spend the time in the classroom to understand the financials,” such as profit margin and return on investment (ROI). Many start ups go out of business because their principals don’t understand those numbers, Woods asserts. Entrepreneurs may even find customers within the halls of their own incubator, says Jackson.

After a few years with an incubator, start ups should be ready to graduate. “The typical length of time is about five years,” says Mixon. “Entrepreneurs have to make sure they’re constantly planning, so they’ll be ready to move on when their time is up.”

Related Article
How to Benefit From a Business Incubator

This article originally appeared in the January 2010 issue of Black Enterprise magazine.

For the companies that are able to offer this important benefit to their employees, the pros say it’s important to reign in expenses and educate workers.  Here are expert-suggested steps for employers and employees to help reduce their financial burdens.

For Employers:

Verify dependents. Weeding out ineligible dependents can help businesses cut out unnecessary costs, says Kadedra Kiner, director of product strategy for BenefitFocus, a healthcare benefits software provider in Charleston, South Carolina.

Kiner says the process is called dependent eligibility verification, and it can be as simple as asking married employees to produce marriage certificates if they seek coverage for their spouses.  If the employee adds a dependent child, she suggests asking them to produce a birth certificate.  “You’re making sure only the right people are covered under your group plan,” Kiner says.

Communicate cost-reduction options with employees. If your business is facing an unaffordable increase in premiums, call a meeting with your employees and learn what features of the plan they value most and what they can cut, suggests Gibbs. “Find out what benefits are most important to your employees, the ‘have-to-haves’” he says.  “If they had a $15 co-pay before, maybe they can get by with a $35 co-pay if the other option is to not have insurance at all.”

Employees may communicate that a “have-to-have” is supplemental insurance, which includes disability, cancer, and accident coverage.  “Supplemental benefits can be offered with employer-paid, partial employer-paid, or employee-paid coverage options,” says Brenda Roberts, an Allstate insurance agent in Chicago.  The last option, employee-paid coverage, could minimize business costs while at least giving employees the chance to get the coverage. Roberts notes that when employers do pay for some of the costs of coverage, they could receive tax benefits for the business expense.

Encourage wellness programs and initiatives. “Focus on healthcare as opposed to sick care,” says Kiner. “Do little things like sponsor walking events or offer fruit [in the breakroom]. Help your employees live a healthier life, and it can keep costs down,” says Kiner.

For Employees:

Read the fine print. Workers have a responsibility to understand their choices during open enrollment, so they can minimize their own healthcare costs, says Gibbs. “If employees miss the deadline for open enrollment, their company might re-enroll them with the same coverage.  But costs are likely to be higher next year, so employees could see their premiums go up significantly, even though they didn’t make any changes,” he says.

Shop around. Gibbs adds that it may also be a good idea for employees to look for an individual plan, even if they qualify for group coverage.  “This year, a lot of employees are finding that it’s less expensive to go out and just get a [private] plan for their spouse and kids, for example, instead of getting that coverage from their employer’s plan,” he says. An added benefit of a private plan is that you don’t automatically lose coverage if you lose your job. (See sidebar for alternatives for the unemployed).

Unemployed? Look into COBRA and COBRA alternatives. The Recovery Act provides for a 65% subsidy of health insurance premiums for people who are in between jobs and eligible for COBRA coverage. That subsidy is due to expire at the end of 2009, though legislation has been introduced to extend it into 2010.

Whether the subsidy is extended or not, some people who are in between jobs may find that other insurance alternatives are better suited for their situation, Kiner says.  For people who are looking for a COBRA alternative, she suggests contacting the provider of their former employer’s group plan. “Talk first to the people that you and your family trusted for health coverage before,” she says.

If you’re unable to obtain a private health insurance plan, contact your state department of insurance to see if you or your dependents qualify for state coverage insurance.  These plans are typically for low-income individuals, or people who have difficulty obtaining insurance because of pre-existing conditions.

Incubators are mentoring centers that provide coaching, networking opportunities, and even affordable office space, says Robert Jackson, CEO of the African American Chamber of Commerce of Central Pennsylvania (AACCCP) in Harrisburg, Pennsylvania. Incubators often operate in partnership with colleges, chambers of commerce, and other resource organizations to offer their services to startups.  Some specialize in minority and women-owned businesses.

Jackson and other experts say to make the most of the time spent in a business incubator, entrepreneurs should adhere to the rules, network with other companies consistently and manage their time well.

Know the requirements. Sheila Mixon, a senior business coach with the Urban League of Greater Cincinnati, helps small businesses locate and apply for business incubator services. “Entrepreneurs can find an incubator by doing a simple Internet search,” she says.

Once a business owner has found a potential match, they usually submit an application and must then be selected before they can join the incubator, Mixon says. Owners should have a business plan and be able to prove that their business is a legitimate up-and-coming company.  “They should have the basics, such as a business checking account, registration with the state, and a tax ID number,” she says.

Participating companies should also be prepared to pay the lease for any offices or conference rooms they use, though rates may be below-market. “Our incubator charges anywhere from $150 to $500 per month for office space,” Jackson says.

Some incubators require owners to attend regular business management seminars.  Ashtae Products Inc., a haircare company in Greensboro, North Carolina, partners with North Carolina A&T University to operate the Business & Entrepreneurship Skills Training (BEST) Center, a local business incubator. Entrepreneurs affiliated with the BEST Center must take a nine-month course on business ownership, says Michael Woods, Ashtae CEO.  “Participants have to spend the time in the classroom to understand the financials.”

Network, network, network. Once accepted into a business incubator, entrepreneurs should take advantage of the networking opportunities they bring, including attending any sponsored seminars or lectures.

There are also informal ways to network.  Jackson says that the AACCCP’s incubator houses companies in diverse industries—from legal representation to event planning to trash hauling—and owners often meet with each other to discuss their business needs.  “Entrepreneurs can find new customers within the halls of their own incubator,” he says.

Leave the nest. If there is one disadvantage to incubators, it’s that their guidance doesn’t last forever, Mixon says. “The typical length of time for services is about five years,” she says. At the five year mark, start-ups should have had time to establish a solid sales history and a healthy balance sheet, and be ready to function without start-up assistance, says Mixon.  “Entrepreneurs have to make sure they’re constantly planning, so they’ll be ready to move on when the time is up.”

Resources

Cincinnati Business Incubator

Entrepreneurial Development Center – African American Chamber of Commerce of Central Pennsylvania

National Urban League

North Carolina A&T Business and Entrepreneurship Skills Training Center

“Many small businesses are suffering tremendous profitability and cash flow pressures because of the economy,” says Mark Allio, regional director of the Massachusetts Small Business Development Center (SBDC) and Minority Business Center in Boston.  Because of these concerns, it can be in the best interest of everyone—businesses and their suppliers–to try to re-work financial deals, he says.  The benefit for the vendor is that they can keep a viable business client, one that’s likely to reward them with business loyalty.

Here are five suggestions for approaching suppliers to renegotiate payment terms:

Take a financial inventory first. “Many cost-saving and cash-saving opportunities are right under your nose.  There’s a lot that can be done in house,” says Allio.  For example, some suppliers may already have provisions in place to extend payment terms with little penalty.  Another tip is to see if your company is paying extra for services you don’t need, and could easily eliminate.

“If you don’t understand your financial numbers, invest some time educating yourself about how they’re structured,” says Allio.  Your accountant, bookkeeper, or other trusted business advisor could be a good source for this information.

Deborah Curate, a certified bookkeeper in Chestnut Ridge, New York, says the key to knowing your financial outlook is to keep consistent records.  “I recommend reconciling your bank account on a monthly basis, and your balance sheets on a weekly basis,” she says.  “That way, you know what’s coming up, and can plan, forecast and do your budget.”

Proactively contact your suppliers. Once you’ve determined that there is a cash flow problem, and you’ve done everything you can internally, be sure to tell your creditors about the situation, says Lucy Holifield, director of the Office of Minority Business Development at the University of Georgia SBDC in Athens, Georgia.  “You have to communicate with your supplier.  This is an important step to take even if your payment isn’t late yet,” she says.

First, contact key vendors. “Call them and explain the truth,” says Allio.  Perhaps you lost some business, or your customers aren’t paying as fast as they should, meaning it’s going to be difficult for you to make payment with the terms you agreed upon.

“Many business owners are reluctant to share bad information with their vendors, but if they’re upfront and honest with the problem, it could help preserve and even solidify the relationship with that vendor,” says Allio.

Know what you’re asking. “Understand your cash flow forecast before setting up a payment plan with anyone,” says Holifield.  Then, you can know exactly what you need to ask for. It could be to extend an invoice so that it’s due in 45 days instead of 30, to accept a partial payment, or agree to another mutually beneficial solution.

Get it in writing. “When you speak to someone in your supplier’s accounts receivable department, and you’ve made a verbal compromise, ask them to send you a letter verifying everything you’ve discussed,” says Courtney Davis, assistant CEO of Davis Professional Accounting in Memphis, Tennessee. “That way, if they still send your account to collections, you’ll have proof that you renegotiated the agreement.”  Davis adds that if the supplier doesn’t send you a letter in an acceptable amount of time–say, within a few days–contact them again.

Find business help. “Considering going to your bank for help if you have an accounts payable problem,” says Davis.  It may be difficult, but it’s not necessarily impossible to receive more credit to help your company through a temporary cash crunch.  Additionally, contact the Small Business Administration to find local organizations that offer free or low-cost classes for entrepreneurs on managing business cash flow.

“When someone is an employee, their employer pays half of their payment for Social Security taxes and other expenses,” says Elaine “Laney” Johnson, president of Financial Business Solutions in Doylestown, Pennsylvania.  “But when they receive income as an independent contractor, they are in fact the employer and employee, so they have to pay the entire tax amount (and the business that hires them does not).”

Analyze the worker relationship. The savings can be significant, but William Levan Byrd, a sole practitioner CPA in Sumter, South Carolina, says entrepreneurs who are considering this option need to respect the service provider’s boundaries.  That’s because the IRS pays special attention to the amount of “independent” a worker has in their “independent contractor” role.

“If a worker completes tasks in their own hours, uses their own equipment, and completes the work in their own way, they may be considered an independent contractor,” says Byrd.  This is often the case with insurance agents, marketing consultants and independent sales representatives.

Alternatively, if a company controls when and where a worker shows up for the job, and pays for all their equipment, the IRS may decide that worker is really an employee and should be taxed accordingly, says Byrd.

As a business owner, if you’re unsure about a worker’s status, Byrd suggests filing out Form SS-8, a checklist that allows the IRS to make that determination.  For more information, visit IRS.gov.

Decide status based on worker role. Even though hiring an independent worker can reduce costs, business owners shouldn’t consider the option solely because of money concerns, Byrd says.

“The biggest mistake I see companies make about independent contractors is to hire them based on cash flow issues,” he says.  “It’s not a decision to be made based on available cash.   It’s a decision to be made based on the appropriate facts of the business situation.  The law is very clear about who can and can not be an independent contractor.”

If a company improperly classifies an employee, the IRS can audit them, require them to pay back employment taxes and would likely assess penalties, says Toni Levy, CPA and owner of Toni Levy and Associates in Louisville, Kentucky.  “Some small businesses owners who get caught find that their penalty fees are higher than the amounts they paid their (misclassified) workers in the first place,” she says.  “It’s the price to pay for disobeying the law.”

Keep paperwork current. Businesses that hire legitimate contractors need to file certain documents at tax time, says Johnson , president of Financial Business Solutions.

“Make sure contractors fill out a Form W-9 before any work begins,” says Johnson.  This is the IRS form used to request the contractor’s correct name, mailing address, taxpayer identification number (TIN) and business information. Blank forms are available from IRS.gov.

Companies should also be prepared to send their workers tax documents after the end of the year.  If a sole proprietor or small company (not a corporation) performs services that total more than $600, companies should annually send them a Form 1099 for tax reporting, says Johnson.

For companies that are growing in need, but don’t have a requirement to bring on an employee, hiring a self-employed contractor can be a cost-effective way to add talent to the team.

Tax Credits for Hiring

The stimulus law extends the benefit of the Work Opportunity Tax Credit, which gives businesses a tax credit of up to $2,400 for employing traditionally disadvantaged workers, including disabled employees, food stamp recipients, and ex-felons.

The stimulus package expands the definition of these disadvantaged “target groups” to include certain unemployed veterans and disaffected youth (ages 16-25, who aren’t working steadily or in school).

Jennell Williams, president and CEO of HR Workplace Solutions in Lansdowne, Pennsylvania, says companies who rely on these employees have more of an incentive to hire them. As an added benefit, they’re likely to attract stronger candidates than in years past. “Because so many people are out of work now, small business owners can take advantage of the legislation’s tax benefits while also being more selective about the people they hire,” Williams says.

Additional Microloan Funding

The stimulus package provides an additional $6 million to fund microloans this year, meaning companies who need to borrow smaller amounts of money (up to $35,000) have a better chance of securing the loan.

Access to this funding is important because the cost of hiring goes beyond paying an employee’s wages, notes Sherryl Baker, president of Baker Human Resources Consulting in Charlotte, North Carolina.  “Hiring also involves recruitment and training costs. Before we can see an increase in hiring numbers, small businesses will have to increase funding to cover those additional expenses,” she says.

Reduced SBA Loan Fees

The Small Business Administration (SBA) reports that minority- and women-owned businesses are three to five times more likely to receive an SBA-backed loan than a conventional bank loan. As part of the recovery act, the fees for this type of financing have been temporarily reduced.

In addition, the SBA is temporarily increasing the guarantee on some 7(a) loans up to 90%, making them less risky for banks. This should spur more lending.

The cost of this legislation will run into the billions of dollars, but officials say it’s necessary to help small businesses get back on their feet.  In a released statement, SBA acting administrator Darryl K. Hairston said:  “With these critical steps by SBA, and the Treasury Department’s commitment of up to $15 billion aimed at getting lending markets flowing again, we are standing up with small business owners across this country and telling them how we are going to put much-needed capital in their hands.”

Ability to “Carryback” Losses on Taxes

The legislation provides tax help for struggling companies, which may free up more money for hiring. Small businesses that have a net operating loss can carry back those losses for five prior years on their returns, instead of the customary two years. The provision applies to small enterprises that have gross revenue of up to $15 million.

Increased Funding for Local Projects

Money is being budgeted for various community initiatives, particularly in the areas of public construction and “green” science.  Related small businesses may be able to expand if they’re tied to these projects.  To find what funding is available in your geographic area, visit Recovery.gov.

Small businesses are responsible for employing about half of all workers in private industry.  If they’re hiring, then the economy can recover.

Regardless of how a customer’s debt became overdue, small businesses need to use documentation, diplomacy, and if necessary, a judgment, to collect what’s owed.

Get customers’ information up front. Della Clark, president of The Enterprise Center, a minority business incubator in Philadelphia, says the first step in resolving a debt problem is to verify that there’s no confusion over what the client needs to pay.

“Make sure the customer has signed off on the scope of services you’re providing,” she says. Depending on the product or service you offer, that means having a well-drafted contract or clear terms of sale.

“If you use invoices, send them out in a timely manner, and include a due date,” adds Harrrine Freeman, CEO and owner of H.E. Freeman Enterprises, a credit counseling service. “If you accept checks, record the [check writer’s] driver’s license number. With that number, you can report bad checks to the Chex system.”

Appeal to your business relationship. If you find that a customer is slow to pay, try to resolve the situation cordially. Be nice.  “When someone gets in a cash crunch, they tend to pay the relationship that’s most important to them first. You want to be high up on that list,” Clark says.

“Smaller companies are usually different from larger ones in that they have to depend more on their relationships with their clients. While they may still have the option to sue, it’s probably more important for them to preserve the relationship,” says lawyer Maureen Wood, a founding managing partner at Wood & Wood L.L.P. in Conyers, Georgia.

“To keep the relationship, start reaching out and sending letters to your client asking them to give you a call if they need to make payment arrangements. Try to keep that personal connection,” she says.

Use a collection attorney or reputable debt collection service. If the customer is still not able to pay, consider hiring a collection agency or attorney to collect the debt on your behalf, Clark advises. “The cost of a collection attorney can be anywhere from 20% to 50% of the outstanding bill, but it’s negotiable. The older the debt, the more the collection services will want,” she says.

One advantage of hiring a collection agency or attorney is they have the ability to put the outstanding debt on the debtor’s credit report, Wood says. As with any professional, be sure to get recommendations and check referrals before hiring them.

Go to court. If the other solutions don’t work, you could sue for the money you’re owed. However, know that even if you win, you still have to take steps to actually collect the money, Wood says.  “You have to enforce the judgment.”

This may involve garnishing the person’s wages or placing a lien on their real estate property. Exact details vary by jurisdiction, but expect to spend at least a little more time and money before collecting your payment.

Dealing with bad debt isn’t fun, but if your customer has an overdue bill, make sure you know the right steps to receive what you’re owed.

UNDOCUMENTED EXPENSES: “It’s more important than ever to make sure you have receipts to document your operating costs, especially if you have business losses,” says Benita Myers, an enrolled agent in Elk Grove, California. “Large losses can trigger an inquiry on your tax return.”

With the current economy, it’s likely that businesses will have significant losses to report. However, if they don’t have the receipts, they can’t deduct certain expenses.

UNPROVEN EXPENSES: Assume you’ve kept all your receipts. If your expenses involve dining and entertainment, be prepared to provide additional information, such as who attended the gatherings and what the business purposes were, says Frederick E. Davis Jr., a tax partner with the New York office of Mitchell & Titus, a member of Ernst & Young Global.

Don’t just throw in a restaurant receipt for a business lunch, he says. Instead, write the names of the other people attending the meeting, and include a description of what was discussed.

INCONSISTENT INCOME: Even if you don’t have a business loss, tax figures that are inconsistent with previous year’s numbers could raise a red flag, Davis says.  “If you make $300,000 in one year, and then make only $25,000 the next, it could raise eyebrows.”

If you did actually experience a large change in income, of course, report it. Just be sure you have written documentation to verify it.

NO MILEAGE RECORDS: When you drive a car for your business, your mileage expenses are legitimate deductions, says Henry J. Reavis, an enrolled agent in Atlanta.  “The problem is people don’t always do a good job keeping track of their business miles.”

Get into the habit of writing down your odometer reading — both before and after a trip — recording where you traveled and the business purpose, he says. Also, make sure you have your miles recorded for the entire year.

SIMPLE ERRORS: Sometimes people make mistakes such as writing the incorrect social security or employer identification number (EIN) on their returns, Davis says. Be sure to proofread everything before sending it to the IRS.

LACK OF PROFESSIONAL HELP: If you need help with any of the points above, or if you have specific tax questions, see a tax professional. And if you’re audited by the IRS, you’ll absolutely want a tax pro, such as an enrolled agent or a CPA, to help you.

“Enrolled agents (EAs) are allowed to represent people in any state before the IRS,” says Myers.  “CPAs are also allowed to represent people in their specific state.”

If you’ve got good records, and good professional help, then you have a good chance of making it through this tax season, whether you’re faced with an audit or not.

Before you get rid of these old machines, think about where they’ll end up, cautions Jamal Theodore, a computer repair specialist and owner of Almasi Tech Solutions in Clinton, Maryland.  “The different components in old computers can contain toxic substances—like lead and mercury—that shouldn’t be in landfills,” he says.

Fortunately, there are safe, green ways to dispose of old electronics. First, make sure your personal files are erased. Next, decide if your best option is to sell, donate, or recycle the equipment.

THOROUGHLY REMOVE PERSONAL FILES

“It’s important to remove your data because leaving it increases the odds of identify theft,” Theodore says.  “No matter how old your system is, someone may be able to access the information that’s on it.”

“I do data recovery professionally, and I can tell you that simply hitting the ‘delete’ button will not permanently erase data,” says Warren Holyfield, CEO of Long Beach, California-based A-Advantage Networking Inc. “A better way to remove sensitive information is to buy software that’s specifically designed to perform a clean wipe of the computer.”

The United States Department of Defense (DOD) has developed specifications for software manufacturers to follow, so look for a package that’s DOD-compliant.  The disk wiping software generally costs between $30 to $100.

Some owners go a step further and physically destroy the hard drive, which is where the data resides. “Many people will just take a hammer to the hard drive.  It’s one sure-fire way to get rid of the data forever,” Theodore says.  Just be sure not to toss the smashed pieces into the trash can where they could end up in a landfill.  “It’s best to take all components, no matter how small and smashed, to an electronics recycling location,” he says.

Another option is to remove the hard drive from the system and store it, much like you would an old photo album. Then, you could safely dispose of the other computer components. If you don’t know where to find the hard drive on your computer, ask a tech-savvy friend to help.

DONATE OR SELL YOUR COMPUTER

If your computer is fairly new, you may be able to resell it.  If you don’t have the time to wait for a buyer, consider giving it to a worthy charity.

“I plan to donate my old personal computer to an organization that provides technology to children in the Cleveland Metropolitan School District. That organization will wipe the data clean for me, and they have a 100% no landfill guarantee,” says Gloria Ware, a Cleveland, Ohio resident who writes Black and Into Green, a blog about environmentalism from an African American perspective.

Another benefit to donating is that you might also receive a tax benefit.

OR JUST RECYCLE IT

“I take my old computers, ironically, to the local landfill. They have a special area for electronics and hazardous waste if you deliver them personally,” Theodore says.

In addition, many computer manufacturers, electronics retailers, and even office supply stores have take-back recycling programs, where they’ll pick up certain electronic products for free, Holyfield says.

Other manufacturers may charge a fee to take back a computer, but they may also offer credits for future purchases.

If your computer is no longer useful, choose to sell it, recycle responsibly, or give it away. You could be providing technology to needy communities, while also helping the environment.

Here are three tips to help you manage your company’s cash flow:

Collect accounts receivables quickly. “Stay on top of your billing. Get your invoices out on time, and don’t let any slip through the cracks,” says Debbi Smith, CPA and owner of Smith Accounting and Associates in Marietta, Georgia.  “A lot of owners have to handle their administration as well as their regular business. It’s easy to forget to follow up with a late-paying customer, but remember, a follow-up call is just as important as a new client call.”

Pam Perry, owner of Ministry Marketing Solutions, a public relations company in Detroit, says the best option, if possible, is to charge upfront. “Since I’m in a service business, it’s important that I bill out in advance,” says Perry.

Even though Perry receives payments early, she says that she occasionally has to deal with clients who don’t pay.  “In those cases, I sometimes hire a virtual assistant (VA) to make collection calls on my behalf. It works really well because the VA is an impartial third party who keeps the conversation professional,” Perry says.

Read your cash flow statements. When you do receive payments, track them in your financial documents. You probably know that the income statement and balance sheet are important, but don’t forget to regularly review your cash flow statement, too. It lists your cash income and outgo, marked at specific time intervals.  If you need to create your own, there are several free templates online.

Even if business is good, the cash flow statement could alert you to potential problems down the road, especially if you don’t get paid for your work in a timely manner.  Not having enough cash on hand could affect your ability to get a loan or access resources to help your company grow.

Credit advisers look at cash flow statements to determine a company’s financial health, says Orlinda Jackson, a business and financial credit adviser in Atlanta. “If a company needs to increase their cash flow, my advice to them is to reduce debt, collect receivables quicker than the due date, increase sales, and manage payables more closely,” she says.

Keep a cash reserve. Just as people need to have money saved for a rainy day, businesses need to keep a cash reserve.  “The best time to build a reserve is when you don’t need it. If you’ve had a good month and gotten paid over and above your budget, put some of that money in your business savings,” Smith says. “You’re never certain about what’s going to happen in the future. If times get hard, you might have to use the reserve to manage your cash flow obligations.”  If you do dip into your savings, treat it like a bill and pay that money back as soon as possible.

If you have a viable business, the cash flow is normally there, Smith says.  It’s just a matter of managing what you have coming in, and making sure it doesn’t leave too quickly!