I also want you to think of how you can change your life away from work, to make the work less frustrating. Hobbies. Working out more. Leaving the office a half hour earlier so you have a little more family time before the fire drill of dinner-homework-bedtime. You can fix a lousy job by reducing its impact on your waking hours. Change your att.i.tude, or your perspective, or your priorities, and watch how things fall into place.

What You Must Have Lined Up Before You Voluntarily Leave a Job - Another job. (If you are thinking about starting your own business, please carefully read my advice that begins on this page this page.) - A 16-month emergency fund. You read that right: If you don't have a new job lined up before you quit your old job, then you should have a 16-month emergency fund saved up. Why 16 months? Because it can take you that long to find your next job. It's as simple as that.

- Health insurance. If you leave a job voluntarily and your next job doesn't provide coverage, or you decide to start your own business, you must make sure you can get coverage elsewhere. If you won't be able to switch over to a spouse's plan, shop for new coverage before you give notice. The cost of insuring a family of four can be $1,000 or more a month. And you want to make sure you have coverage in place before you give notice. You can search for individual policies at ehealthinsurance.com.

LESSON 2. ADVICE FOR THE UNEMPLOYED ADVICE FOR THE UNEMPLOYED.

Anyone who is out of work must stand in the truth I presented at the beginning of this cla.s.s. Our slow economic recovery means job growth will remain sluggish and that in turn means we could be facing years during which the number of people looking for work will far exceed the number of job openings. I wish I could tell you that if you can just hold on a bit longer everything will make a big turn for the better and there will be plenty of new opportunities. But, sadly, that is not the truth.

Here are my recommendations for adjusting your career dreams to today's realities: CUT YOUR SPENDING IMMEDIATELY ONCE YOU LOSE A JOB.

There is a dangerous tendency to just stick with the status quo right after you are laid off. Between your severance, unemployment benefits, and your emergency savings you think you are going to be fine for a while, so you don't feel the need to cut back. But I want to repeat a startling statistic from earlier: Nearly one-third of the unemployed in late 2010 had been out of work for at least one year. That's likely a lot longer than your severance, and even if your state has expanded the amount of time you can receive unemployment benefits during this slow recovery, the payments, as noted earlier, typically will cover just a fraction of your prior salary.

That makes your emergency fund all the more important. In fact, my advice is that every family that is dealing with a layoff should take measures to make their emergency fund last as long as possible. I realize it may be harder to add to your emergency fund when your income is reduced; that's not what I'm suggesting. The goal is to cut your expenses as much as possible, as quickly as possible. Review every expenditure. Spending that you could afford when you had a job is not necessarily spending you can still afford.

How much to cut? Stand in the truth of the job market in your area, and your field. If you know it may take time to find a job-any job-you must be very aggressive in scaling back your expenses right now. Challenge yourself to reduce your expenses so your eight-month emergency fund could last twelve months. If that means getting rid of one of the cars, or scaling back the kids' after-school programs, so be it.

DO NOT DIP INTO YOUR RETIREMENT SAVINGS.

As we discussed in "Stand in Your Truth," one of the biggest challenges is to weigh the long-term impact of any financial decision. Yet often we get so caught up in the moment that we don't stop to think through the impact that decision will have on our long-term financial stability.

This is especially tricky when you have lost a job. You become so focused on just getting by today that you think it is okay to borrow from your future. So instead of leaving your 401(k) growing for your future retirement, you cash it out the minute you are laid off or you chip away at it. You tell yourself you will worry about retirement later; you need to pay the bills today.

I want you to know how very sympathetic I am to the stress of paying the bills when you have been laid off. But I do not want you to touch your retirement savings. As I explain in all three of the Retirement Cla.s.ses, the truth you must stand in is that your personal savings are going to play a pivotal role in whether you in fact can live the life you want and deserve in retirement. And the only way that will happen is if you leave your retirement savings alone.

MAKE SURE YOUR CREDIT PROFILE REMAINS STRONG.

As a job hunter it is your job to impress potential employers, right? You need a resume that grabs their attention, you need to make an impression during the interview process, and you'll be relying on your references to sing your praises. You also may need your credit report. If you are applying for a job that requires you to handle money in any way, a potential employer will want to make sure you don't have any red flags that might make you a high risk around the cash register or dealing with the company's finances. And even if you aren't applying for a finance-related position your credit report can still be an important factor in whether you get hired. The credit report has become a data point employers like to consider as an insight into your sense of responsibility and stability. If they find a financial mess, it could give them a reason to reconsider hiring you. In today's world, where you are competing against so many other applicants, don't let a shaky credit report keep you from your next job. That means making sure you stay current with all your bill payments.

If you already have some dings on your report and a potential employer asks for permission to have a look, take control of the situation. Give them permission, but tell them the truth behind your credit report. Acknowledge the problems; don't hide from them. I can't guarantee that standing in your truth will get you hired, but I can guarantee you that hiding from the truth and letting a hiring manager find out on his own will likely work against you.

DO NOT GO BACK TO SCHOOL TO AVOID A HARD JOB MARKET.

I am all for learning new skills that will help you land a new job. That's a great use of your local community college. But I do not condone going back to school full-time just because you can't find a job. You have to have a better reason for going back to school. My litmus test is pretty simple: If the first time you thought about going back to school was about three weeks after your severance ran out, you are using school as an escape hatch. Here are the questions you need to carefully ask yourself-and answer truthfully-if you are considering returning to school: * Am I looking for an excuse to stop looking for a job? Am I looking for an excuse to stop looking for a job? I am not minimizing how difficult-and even depressing-it can be to remain optimistic and positive in your search for work. But I would recommend you adjust your job criteria instead of giving up. As I explain below, one of the realities all job seekers need to accept is that a job that pays less than a former job is better than no job at all. I am not minimizing how difficult-and even depressing-it can be to remain optimistic and positive in your search for work. But I would recommend you adjust your job criteria instead of giving up. As I explain below, one of the realities all job seekers need to accept is that a job that pays less than a former job is better than no job at all.

* Do I need this degree or certification? Do I need this degree or certification? Read that carefully; the emphasis is on "need." If you haven't been told outright by those in a position to hire you that you in fact lack a key skill, then why are you so intent on going back to school? Is it because you know for a fact it will make you a better job candidate in the future, or because you think it's smart to bide your time in school until the job market improves? As I have explained earlier in this cla.s.s, I think that could be years, not months. Read that carefully; the emphasis is on "need." If you haven't been told outright by those in a position to hire you that you in fact lack a key skill, then why are you so intent on going back to school? Is it because you know for a fact it will make you a better job candidate in the future, or because you think it's smart to bide your time in school until the job market improves? As I have explained earlier in this cla.s.s, I think that could be years, not months.

* Can I afford to go back to school? Can I afford to go back to school? You are not to tap your emergency savings if it reduces your cushion to less than eight months of living expenses. And as I just explained, you are not allowed to touch your retirement savings. If you are considering taking out a loan to finance a return to school, please make sure you read the college loan lesson in the Family Cla.s.s. The advice holds whether you are 18 or 38 or 58: Never take on debt that you will have trouble repaying. And when you are older you need to consider the impact more debt will have on your other financial goals. I do not want you to borrow for school if it means that once you have to start repaying the loan you will stop saving for retirement or delay paying down your mortgage. You are not to tap your emergency savings if it reduces your cushion to less than eight months of living expenses. And as I just explained, you are not allowed to touch your retirement savings. If you are considering taking out a loan to finance a return to school, please make sure you read the college loan lesson in the Family Cla.s.s. The advice holds whether you are 18 or 38 or 58: Never take on debt that you will have trouble repaying. And when you are older you need to consider the impact more debt will have on your other financial goals. I do not want you to borrow for school if it means that once you have to start repaying the loan you will stop saving for retirement or delay paying down your mortgage.

GET TO WORK AS FAST AS POSSIBLE, RATHER THAN HOLDING OUT FOR A BETTER OFFER.

The longer you are out of work, the harder it becomes to find work. Potential employers worry that your skills may no longer be as up-to-date as those of another candidate who is currently employed.

I know you have no intention of becoming chronically unemployed, but what you may not realize is how your mindset could be keeping you from getting back to work faster: * Do not hold out for the same job, and the same pay Do not hold out for the same job, and the same pay. An important lesson in the "Stand in Your Truth" chapter was the importance of dealing with what is real for you today, rather than staying stuck on what you had in the past. That is very relevant in your job search. What you made at your last job, what your responsibilities were at your last job, is irrelevant. To get back to work you must focus on what is real today. A potential employer with so many qualified candidates to choose from does not really need to worry too much about matching your pay and benefits from your last job; all that matters is what the current market rate is for your job. The faster you accept this cold fact the faster you will get back to work. If your friends and colleagues can't give you a sense of what is reasonable pay for the jobs you are seeking, websites such as payscale.com and and salary.com are a good reference. are a good reference.

If your issue is that you can't find any job opportunities that match your skills or salary range, the solution is to not sit back and wait for those jobs to surface. Remember, the focus must be on getting back to work as fast as possible. If that means taking a job that is "less than" your last job and that pays less, I am telling you to take that job! Please listen to me here: In this job market you simply cannot afford to be patient. You think you'll just give it two more months, then that becomes five months, then a year. And now you have been out of work so long you lose your compet.i.tive edge compared to other job seekers who are still working. Having a job today-any job-is far better than continuing to look for a job.

HOW TO DEAL WITH A STEEP PAY CUT.

Over the past few years I have been told by many unemployed people that they can't afford to take a lower-paying job because it won't cover all their living expenses. My answer to them is that they are not standing in their truth. I am going to keep saying this: The reality of today's economy is that making something is far better than making nothing. If your last job paid $150,000 and right now you can only find a job that pays $80,000 you must take the $80,000 job. And be happy you have work. If that means your family must reduce its spending drastically, that is your family's truth to stand in. Obviously when you are taking a severe pay cut, tr.i.m.m.i.n.g the cable bill and eating out less isn't going to solve your shortfall. You may need to move to a less expensive home, in a less expensive part of town. You may need to consider public schools over private schools.

A special note for stay-at-home moms: You and I know that what you do is indeed work, and it is in fact the most important "job" in your family. It is so very important that you understand that what I am about to say to you comes from a place of deep respect: Can your family really afford for you to remain a stay-at-home parent? I know that is what you want. And let me be clear: I know the incredible value and gift you are providing for your family. But I am asking you to open your heart for a few minutes and consider that what your family may need from you right now is income. I am not suggesting you take on a 50-hour-a-week office job. How about something part-time? Maybe something that allows you to work from home? Nor am I suggesting that this be a permanent change, only that extra income might be just what your family needs from you right now. That might be the truth you need to stand in-it might just be the best way you can take care of your family today, given their financial needs. You and I know that what you do is indeed work, and it is in fact the most important "job" in your family. It is so very important that you understand that what I am about to say to you comes from a place of deep respect: Can your family really afford for you to remain a stay-at-home parent? I know that is what you want. And let me be clear: I know the incredible value and gift you are providing for your family. But I am asking you to open your heart for a few minutes and consider that what your family may need from you right now is income. I am not suggesting you take on a 50-hour-a-week office job. How about something part-time? Maybe something that allows you to work from home? Nor am I suggesting that this be a permanent change, only that extra income might be just what your family needs from you right now. That might be the truth you need to stand in-it might just be the best way you can take care of your family today, given their financial needs.

LESSON 3. STARTING (AND RUNNING) YOUR OWN BUSINESS STARTING (AND RUNNING) YOUR OWN BUSINESS.

Being your own boss has long been a dream of many, and I understand how alluring it can be right now. For those of you unable to get hired, launching your own business seems like a great way to get back to work. And I know many of you are tired of the long hours and lack of advancement at your current job; the dream is to put all that time and effort into something that you own for yourself.

MAKING IT WORK.

Being your own boss can indeed be a smart, proactive twenty-first-century strategy, given how many of the old advantages of employment have disappeared. If you're not going to receive a pension or retiree health benefits, and if even the hardest working, most valued workers have little job security, working for a corporation doesn't exactly have the same allure as it did in past generations.

However, at the same time I am concerned that many of you may be considering starting your own business as a solution for the fact that you can't find a job, or because you are simply sick of working for someone else. Neither of those is a sufficiently good reason, in my opinion. Starting your own business is not a Plan B. You do not decide you want to run your own business just because you have run out of patience looking for a job or working for someone else. You better have a pa.s.sion, an entrepreneurial talent, and a seriously careful financial plan. In my opinion, the best dreamers are, at their core, deeply, deeply pragmatic.

LAUNCHING A BUSINESS: CAN YOU AFFORD IT?.

Before you make a move, I would ask you to make a clear-eyed personal a.s.sessment and then come up with a business plan.

The Personal Checklist I am going to a.s.sume you have a fabulous business idea and the expertise to pull it off. Pa.s.sion? Check. But that's not enough to get my approval. You must also show me that you: - Have an eight-month emergency savings fund.

- Do not have any credit card debt.

- Have a FICO credit score of 700 or higher.

The Business Checklist If you pa.s.s those first three tests, great. Now let's focus on how you will finance the business: - You have savings (not your personal emergency fund) that can cover up to one year of operating expenses for your business.

- You will not tap your retirement savings, home equity, a college fund, or any a.s.set to pay for your start-up costs.

- You will not use your home as collateral for any personal or business loan.

I know those are some tough restrictions to meet. But listen closely: I have seen so many enthusiastic entrepreneurs not only lose their business, but do horrible damage to their family's financial security when they pour everything into an idea that does not make it. I am a huge cheerleader for anyone who has the dream to be their own boss, but only if the pursuit of that dream does not undermine any of your other dreams.

IT'S NOT A NO...IT'S A NOT YET If you have credit card debt or you don't have enough excess savings to cover twelve months of operating capital for your business, I am not telling you to stop dreaming. I am asking you to move slowly. Keep working at the job you have, or get any part-time work you can so you can get your finances in great shape before you launch your business. Think of this as a high-level athletic compet.i.tion. If you walk out onto the field in poor financial shape, the odds are you will lose. Spend some time in the start-up gym, doing some financial training, so to speak, and walk onto the field in amazing shape and you will have the stamina to stay in the game much longer, thereby increasing your odds of coming out a winner.

I also recommend that before you move forward on any start-up you become expert in the basic bookkeeping and balance-sheet management that is the key to running a business. I recently stepped in to help a family that was not only deep in debt, but the husband's paycheck was being garnished by the IRS because his wife, who had started a successful home-based business, had not been sending in her required quarterly federal self-employment tax payments. Nor was she making state tax payments. This tends to trip up so many first-time entrepreneurs. Even if you are running a home-based business with no employees, you must pay tax, every quarter. You can hire a small business accountant to help you set up all your tax and payment systems. (Or, if you are a sole proprietor and will simply report your business on Schedule C of your federal 1040 tax return, you can use online tax preparation software such as TurboTax designed for small business tax filing. It will compute your estimated tax payments for the coming year, and print out the forms you will need to file.) LET'S TALK CASH I want to take a minute to address those of you who may be thinking of starting a business in which you may often be paid with cash, such as working as a ma.s.sage therapist or gardener. I hope you are responsible enough to stand in this very important truth: Cash is income, and our country relies on all of us paying our share of income tax to support our public services. To not report cash income and not pay the tax that is owed is dishonest. I am not just talking about breaking the law-that should be enough to stop you right in your tracks-but something that runs even deeper into your values. If you have children, please think about the lesson you are imparting; you are basically letting your children know that you think it's okay to abandon your responsibility as a citizen of this country.

PROFIT AND LOSS.

Now, in addition to understanding your tax liabilities, you also need to be able to know your way around a basic profit-and-loss (P&L) financial statement. No idea what that's about? That's the first sign you're not ready to launch a business. There are many books and software programs such as QuickBooks on the market to help you get a grip on the financial and business requirements for a successful start-up. I would also encourage you to check in with your local community college to see what courses might be available. And as I explain later in this cla.s.s, if you live near a Small Business Development Center (SBDC), check in and see what materials and cla.s.ses are available to help you learn the basics of being your own boss.

WHERE TO GET THE MONEY TO START YOUR BUSINESS.

Ideally you would not need to borrow any money to get going. But I know that may not be feasible. The biggest mistake I see entrepreneurs make is that they get so caught up in their pa.s.sion that they make a mess of their financial life. Here's what you need to consider before you borrow money: * Your personal credit card Your personal credit card. Be very careful about tapping your credit card to cover start-up costs. If you suddenly have a lot more in unpaid credit card bills and it sends your overall debt-to-credit limit higher, your FICO credit score will fall. That could make your credit card issuer nervous enough that it cuts your credit limit, sending your FICO score down even more, and could cause the interest rate on new charges to jump higher. All of that can have all sorts of repercussions throughout your family's financial life; you'll pay more for a car loan, and it could impact your insurance rates. It would also hurt your ability to get a business loan; what lender wouldn't look at your personal finances to gauge your creditworthiness as a business owner?

Let's face up to what could happen if your business doesn't make it and you want to get a job working for someone else. If your spending on your business caused you to fall behind on your credit card payments, that could show up as a ding on your credit report; as I explained earlier in this cla.s.s, potential employers often will check your credit report when considering your job application. You can't afford for them to see any reason not to hire you.

The best way to keep your FICO credit score strong is to make sure that your total monthly balances are just a small fraction of your overall credit lines. There's no magic formula to what FICO deems ideal, just that a 10% debt-to-credit-limit ratio is better than 20% and 20% is better than 30%, etc. I understand you may want to tap your credit lines in the early months of getting your business rolling, but you are to never let your balances exceed 30% of your overall available credit lines. Any higher and you could run into trouble being able to pay it back promptly; it may also set off alarms at the credit card companies.

* A business credit card A business credit card. Please be extra careful here. Credit card issuers have actually stepped up their offers for "professional" cards of late. Not because they are committed to supporting small business, but because these cards are not covered by the 2009 credit card reform legislation. So all the important protections you now have with a personal credit card are not covered when you use a business card.

You also need to understand that if you were to fall behind on your business card payments, or default on them, it can be reported to the credit bureaus and will impact your personal credit report and credit score. Do not for one minute think that business is business and personal is personal.

If you decide that a business card is a good deal, I want you to treat it as if it were part of your "personal" credit. My advice that your monthly balances not exceed 30% of your overall credit limits includes your business card. Do not look at your business card debt as "separate" from your family's credit situation. Treat it all as one pot, so you will not allow yourself to become overextended. Let's be real here: If you go crazy with spending on a business card it will ultimately cause plenty of financial pain for your family.

* Family and friends Family and friends. In the Family Cla.s.s, I address myself to those who are asked to help a family member in need, but in this case, I would recommend you read those pa.s.sages (see this page this page) in order to understand the dynamic and what you are really asking of relatives and friends when you ask them to loan you money or invest in your start-up. It is dishonest and manipulative to ask someone who cares about you to give you money if you know they truly cannot afford it. And you should never-and I do mean never-ask anyone to cosign a loan that would put their home or any other a.s.sets at risk. Chasing a dream that could ruin a loved one is in no way a dream I can endorse.

* A bank or credit union loan A bank or credit union loan. You should by all means sit down with your local bank or credit union and ask them what their loan programs are for start-up businesses. But what you are likely to hear is that they won't give you a business loan unless you have a year or two of operations under your belt-and you can show you have positive cash flow. You will also likely need a strong credit score and proof that you have money of your own invested in the business, what is known as equity. You will also need collateral for the loan. You are never to use your home as collateral. Absolutely never-do you hear me? It is one thing to lose your business, but do you really want to lose your home at the same time? For that is what will happen if you can't repay the loan.

* Start-up grants and microloans Start-up grants and microloans. Okay, now finally some upbeat news: There are indeed resources to help small business start-ups. Locate the economic development divisions of your local and state government and ask for contacts that can help you figure out whether there are any government grants and subsidies to help you launch your business. I also highly recommend you find a regional Small Business Development Center (SBDC) that you can consult with. SBDCs are nonprofit organizations-often they are housed within colleges-that provide training and a.s.sistance to small business owners of all sizes. Through an SBDC you can learn about the Small Business Administration's microloan program. The SBA does not make loans directly; rather it offers guarantees to lenders who make the loans. There are many different types of SBA-backed business loans, but most of them require you to have a viable business up and running for a few years. The microloan program is more flexible. In 2010 the maximum loan amount was increased to $35,000; the average loan is about $13,000.

Go to The Cla.s.sroom at www.suzeorman.com:There you'll find the link to the SBDC page on the Small Business Administration's website. Or find local SBDCs at www.bplans.com/sbdc.

A FEW WORDS ABOUT MICRO LENDING.

Given how picky conventional lenders have been the past few years, I think one of the best opportunities to land financing for a start-up is through a private micro-lending program. Many of these programs are currently run on a local-rather than a national-level. One way to find programs in your region is to do a quick web search; simply type your hometown's name along with the term "small business micro lending" into your search engine. And be sure to ask around-the nearest SBDC is always a good resource for local micro lenders that specialize in connecting lenders and borrowers in your town.

These micro-lending programs can be a fabulous way to secure a small loan for your young business. But please proceed with care. Each organization has its own rules on qualifying for a loan and provides guidance on how to borrow manageable sums. What's great is that loans tend to be short-term (two to five years) and at a fixed interest rate. A fixed-rate loan is much better than using a variable-rate credit card to fund your business. But micro-lending loan rates can still be as high as 15% or so. Top-notch micro lenders will be sure to work closely with you to show you your monthly loan payments; it is always wise to borrow less if that means you will have more confidence you can make the payments.

RUNNING YOUR OWN BUSINESS.

Managing your business has never been harder. But there is also great opportunity. If you have an innovative product or idea, or can deliver your service for less than other businesses, potential clients will be interested in listening to your sales pitch. When their business is great they are less inclined to make changes; why fix what's not broken? But in today's economy, with businesses laser focused on wringing out more productivity and searching for every and any compet.i.tive edge, you might actually have an easier time getting new clients.

That said, it would be naive to suggest this is not the hardest of times for many small businesses.

Here is what you need to consider before deciding to expand or close down: WHEN TO EXPAND YOUR BUSINESS.

One of the hardest decisions any business owner must make is when to take the plunge and expand. We've all heard the saying, "Grow or die." But the stakes are so high right now; overextend yourself in a very challenging economy and you could lose everything. I want to be clear that I am a big believer in growing your dreams. But only if the time is right.

My advice is to always trust your gut. Not your accountant who tells you the numbers look good, or your financial advisor who shows you compelling spreadsheets of what your wealth could potentially be if it all works out.

There really is no such thing as a wrong time to launch or grow a business, as long as you do it responsibly. At the website of Inc Inc. magazine is a wonderful slide show of now-iconic U.S. firms such as Walt Disney, UPS, and Domino's Pizza that in fact got their start during a recession, often with nothing more than personal savings or small personal loans to fund the start-up. Yes, they are huge global firms now, but they too got their start as small businesses. Type "Inc 17 recession success stories" into your browser's search box and prepare to be inspired.

IF IT DOESN'T FEEL RIGHT, IT ISN'T RIGHT Doing something because you think you should-whether it is loaning money to your cousin or expanding your business-is not standing in the truth. You are only to take action when you feel deep down in your bones that it is the right and honest move for you. If the thought of expanding your business makes you queasy, you should be cautious. I am not talking about the b.u.t.terflies that settle in when you are excited or nervous. But if you are waking up at night with worry, listen to what your body is telling you. If your spouse or partner does not think this is the right move, right now, listen to that as well. There is no business that is more important than respecting the love of your family.

I've probably turned down ten times as many business opportunities as I have accepted. Not because they were bad ideas. In fact, some of my closest friends and family have told me more than a few times that I was crazy to have walked away from deals that would have paid me quite well. But I have always listened to my gut. If I do not literally feel that a decision is right for me, right now, no matter how much money is involved, I simply say no.

I am all for expansion, but one problem that sinks many expansion plans is an a.s.sumption that the next store or the next client will automatically pay off. There is a tendency to forget that if you are physically expanding your operations the expansion comes with fixed new costs, and it may take months, if not years, to earn the extra revenue that fully covers the expenses. Moreover, if your expansion includes hiring more employees, you need to think through how many months you may need to pay that salary-and those benefits-before the new business starts seeing positive cash flow that helps you cover your extra payroll expenses.

None of that is meant as a reason to not expand. But I want your expansion to be lasting. Not a three-month or six-month "mistake" that ends up jeopardizing your hard-won success to date.

How do you know if you are financially ready to expand? For starters, you must have at least twelve months' working capital saved up to pay for your expansion. This is in addition to the twelve months' working capital for the expenses of your existing business. In other words, before you expand you must have an extra cushion of working capital to help you pay for the expansion as it gets off its feet.

Given the success of your existing business you will now also have more options to borrow to fund your expansion. Please be very careful. You are never to borrow against your personal a.s.sets. So no second mortgages or home equity lines of credit. Losing your business is bad enough; losing your home on top of that would be tragic. Any bank or credit union that will extend you a business loan is indeed going to ask for collateral; likely that will be a.s.sets of your existing business. I recommend you sit down with a trusted accountant or financial business advisor and carefully run through all of your financial statements and projections for your expansion. You want to leap only when you feel confident you can land on your feet.

WHEN TO CLOSE YOUR BUSINESS.

All business is cyclical. There are ups and downs. Opportunities and setbacks. Yet the down cycle brought on by the financial crisis in 2008 has been especially brutal for many of you, and has not yet fully loosened its grip. When nearly one in five Americans is either out of work or just getting by with a part-time job, any retail business is going to feel the pain. And those of you running a business-to-business operation have seen your bottom line suffer as your clients have scaled back their own operations.

Standing in Your Truth in Business We are all hoping things get better soon, much better. But hope is not a viable business plan. I can imagine how hard it is to contemplate closing down a business that you started, nurtured, and invested so much hope in. I do not for one minute minimize the frustration and heartache you must feel whenever you stare at the red ink and ponder letting go. But letting go of a business that is no longer able to support itself-and your family-may be the smartest and bravest business decision you ever make. From my vantage point, it takes far more courage and intelligence to walk away than it does to stay. I am asking you to call upon every lesson you learned in the "Stand in Your Truth" cla.s.s and ask yourself if it is time to let go of a struggling business.

Here are some of my warning signs that you can't afford to keep a business going. If you have taken any of these steps, or are contemplating any of these moves, please stand in your truth that it is time to close down your business.

- You have begun to use your family's personal emergency fund to cover your business expenses. What will you live on if after depleting your family's savings the business has still not turned around?

- You are tapping into your retirement savings. This is a dangerous and costly mistake.

- You are tapping a HELOC. Losing your business is hard enough. Don't put your family's home on the line as well.

- You are paying only the minimum due on your credit cards, while adding more new purchases to your unpaid balance. That is a hole that will be hard to dig your way out of, and as I explained earlier in this cla.s.s it will set off a cascade of costly consequences.

- You have not paid yourself a dime in six months. You are essentially working for free while your debt load increases.

- You are asking a family member to cosign a loan or give you money that jeopardizes their security. It is entirely dishonest to knowingly weaken another person.

If any of these signs apply to you, I am asking you to wake up to the truth. Please do not keep throwing good money after a bad business that is no longer viable. In retrospect this is a decision that will allow you to say, "I am glad I did," rather than "I wish I hadn't."

Closing Down a Business Responsibly If you decide the strongest act right now is to close your business, please take care in winding things down.

As soon as possible, let your employees know what you are contemplating. It is an act of respect that will last a lifetime. You cannot control the fact that your business has reached an impossible impa.s.se, but you have absolute control over how you treat your employees during this difficult time. Every extra week or month you give them not just to look for another job but also to beef up their savings and reduce their expenses is time you have given them by sharing your business's truth.

Then turn to the practical steps involved in closing down a business. Depending on your business structure, you may need to notify your state and local governments that you are no longer in operation. If you had employees, the IRS expects you to pay any payroll tax still owed, and you will need to let the IRS know of your plans to stop operation. Your accountant will be able to guide you through the paperwork. At the same time, closing down doesn't absolve you from paying outstanding bills. If you can't see your way to making good on those debts, do not run or hide. Hire a bankruptcy lawyer to help you stand in your truth. I do not bring up the topic of bankruptcy lightly. It is indeed a serious step with serious repercussions. But closing your eyes and hoping no one will "come after" you for unpaid bills or taxes is not standing in the truth.

At the website nolo.com you can find solid basic information on what you will need to take care of to properly close down a business, as well as a "Bankruptcy Center" that is a great starting point for understanding the ins and outs of that process. you can find solid basic information on what you will need to take care of to properly close down a business, as well as a "Bankruptcy Center" that is a great starting point for understanding the ins and outs of that process.

And I want you to listen to me: When one door closes, another opens. This business is ending. That does not mean your life is ending. Nor does it mean there cannot be another business dream in the future. You are doing what is right for you-and your family-today. Be proud of your strength. And use that strength to propel you forward into your next career.

LESSON RECAP.

FOR THE EMPLOYED.

- A large emergency fund has never been a more important career management tool.

- Make sure you grab every dollar offered in a 401(k) match.

- Never leave a job without another job lined up or a significant amount of savings that can sustain you for two years.

- Raises are not an ent.i.tlement. Make your case by helping propel the business forward.

FOR THE UNEMPLOYED.

- Do not wait for the best job; take the best option that you have today.

- Set your salary demands based on the current marketplace. What you made at your last job is not relevant.

- Accept that to "afford" a lower salary, your family may need to reduce its spending dramatically, including moving to a less expensive home.

- Going back to school must be based on a clear-eyed strategic a.s.sessment, not merely the fact that you are tired of looking for work or hope to "wait out" the bad job market by going back to school.

FOR ENTREPRENEURS.