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Time to quit if business is not breakeven

Dear Dave,

My husband and I have four kids, and I make $50,000 a year. He runs a small business that has been floundering for a while now, so we're basically living off my income. Part of that income is going into the business. Plus, we don't have much in savings, and we're behind on our house payments. Do you have any advice?

PAIGE

Dear Paige,

First of all, you and your husband have to get on the same page financially. Sit down together, and do a household budget and a profit and loss statement on the business. A profit and loss statement will tell you the money that comes in minus the money that goes out.

Here's the thing. If you're putting other money into a business account, that's a clue that you're not making money on the business. Put his rent, supplies and any other business expenses on the profit and loss list, and write out — step by step — what it will take for you to breakeven in the business each month. If you don't at least breakeven, then it's time for him to do something else for a living.

I'm an entrepreneur and a business owner. I get the allure and excitement that goes along with running your own business. But family and your financial responsibilities come first. You don't need to put any money into the business account, except for the income he creates. And while you two are sorting this out, use your income to get current on your house payments and attack any other debt.

— DAVE

Dear Dave,

I'm looking for a good accounting program for small business. Do you have any suggestions?

JULIE

Dear Julie,

The best one I've seen is called FreshBooks. I like it so much that we're actually endorsing it on some of our podcasts and a few other places. It's a cloud-based program for small business, and it's a pretty simple accounting system.

Honestly, you don't want anything super complicated for small-business accounting. You just need something that allows you to write out invoices and keep up with your expenses while categorising them. It's important you know what's going on in your business — to be able to continually analyse what's happening — and have the ability to look in your rear-view mirror and see if anything's coming up behind you.

— DAVE

Dave Ramsey is CEO of Ramsey Solutions. He has authored seven bestselling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on the web at daveramsey.com and on Twitter at @DaveRamsey

Putting it all down: if you run a small business and you need to pump money into it to make up for shortfalls, it is time to do the maths and make a tough decision, especially if it is draining family finances

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Published February 18, 2017 at 8:00 am (Updated February 17, 2017 at 7:19 pm)

Time to quit if business is not breakeven

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