You Have Lost it All, Are You Going to Allow it to Happen Again?

OK, the horse is out of the barn, your notes were called and your business closed and liquidated and your personal guaranties are now being paid off. Disaster, you lost everything you have worked so hard to build.

What is done is done, but I also know most of you will rebuild. A new business, a new home, restored savings and you will succeed again. That is the nature of a small business owner: an entrepreneur at heart, a risk taker.

However, you can learn from your experience. You can shut the barn door before the horse gets out, this time. But I see small business owners who lost everything rebuild and do the same things they did last time and thus, fail to learn how to better protect themselves should loss occur again.

It seems everyone believes it will never happen to them again. Not the best bet when so much is at stake and so much has already been lost. It's time to shut the door completely and finally, for once and for all.

A few rules to live by:

1. If you are the risk taker, leave your wife out of it; off the books, not involved in the business and NEVER a guarantor no matter what.

2. Remove your name from the family home. It is not a good idea. If she divorces you she will get the house anyway but this way you can take risk and make certain your home is never at risk again. Do not believe that just because your wife is not a guarantor, the bank cannot reach the house through your name. Get your name off the deed. Keep it on the mortgage but off the deed.

3. Same with vacation homes and any valuable asset.

4. Enrich your wife, give her a pay check with taxes deducted and have her build wealth in her own account. Trust her. She is your wife and the mother of your children. Let her hold your wealth, she will do a better job at protecting it than you will; you are a risk taker.

5. Put the home into an LLC or a trust, even better protection. Keep your name off being an executor or a beneficiary; use your children.

6. Have separate checking and saving accounts.

7. If you must build personal cash, use a 401k not an IRA, much better protection.

8. Have adequate liability insurance, health insurance and auto insurance, it is very valuable when you need it.

9. Take a pay check; why else are you in business? If you cannot, reconsider what and why you are in this business.

10. Have a rainy day fund if possible. It does rain.

Now you can guaranty anything, take whatever risk you choose and rest assure none of your important assets are in harm's way, we have removed you from any ownership position.

Next cycle you will have more options and will be better protected. Follow this plan.