You Must Make Lifestyle Changes To Survive A Workout

Most small business owners understand completely the need to sacrifice one’s self for the benefit of the business. (Many actually take this to an extreme and sacrifice their families as well, but that is a topic for another day.) However, not everyone understands that they may need to accept many lifestyle changes to survive a workout.

The sacrifices I speak of may be lifestyle downgrading, things like selling the Maserati or the boat, dumping the country club membership, timeshare and expensive vacations, forgoing the 401k contributions or even reconsidering expensive college expenses and tithing to the church. All are frequently discussed issues.

Some borrowers need to be reminded that previously afforded lifestyles may no longer be appropriate or affordable given sharply reduced revenues and unsupportable secured debt.

It goes even deeper. Aside from personal adjustments that must be made, credit cards must be considered and huge credit card bills referencing a more lavish lifestyle may have to be put into default also. Further yet – and sometimes the most difficult discussion – the value of the business real estate needs to be reconsidered. Typically, we find that it is way over-leveraged, no longer worth the debt and crushing the operation by sucking out way too much cash. Sometimes, it simply needs to be abandoned. Even very expensive homes may be in question as the large mortgages may not be affordable.

The exercise is simple – we must protect the core business and rid you of the excessive debt as it is the business that, when put back into balance and rebuilt once again, will provide you with the lifestyle you can afford. The challenge is not to protect a way of life, but to protect the business so you can survive and move on in whatever form that takes.

Yes, a workout comes at a high cost, requiring not only some cash but usually also some major lifestyle adjustments and overhead reconsideration.