Sag Harbor

USA today reports that your small business may be in danger because of the falling housing prices. There will be less borrowing from home equity, so fewer businesses will start since most businesses are created from home equity loans. People will also start feeling richer. Which means instead of going and and spending all their money on goods and services, they’ll spend it all remodeling their homes and such. Rhonda Abrams suggests a few things business owners can do to prepare

• Start a reserve fund. It’s always a good idea to have money in the bank, but when the economy is seeing a shift in such an important sector, it’s particularly important. Start building a reserve account now to cover about three months of fixed expenses.

• Borrow against home equity now. I’m not a huge fan of borrowing against one’s home to finance a business, but if you’re definitely planning on doing so, it’s probably better to do it sooner rather than later. If your home value declines, the amount of money you can borrow will likewise decline. However, if you have to sell your home, you could end up owing more than the value of your house. So be very, very careful.

• If you’re in a construction trade, look for non-residential work. Nearly one out of every eight self-employed individuals is in the construction industry, according to the Census Bureau. Next year, construction spending is expected to decline for the first time since 1991, according to the McGraw-Hill Construction forecast. Most of the decline will come in single-family homes. So start casting a wider net for commercial construction jobs. And start paying down your bills and saving money now.

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