One of the first pieces of financial advice my dad gave me when I started living on my own was to run my household as if it were a small business.  Sorry, dad, but it took me years to get the hang of that.  I’d never run a small business so how could I relate to the advice?  Dad meant well but that was one of those last-minute thoughts that need a lifetime of experience to make sense.

Every small business shares one thing with big businesses and households: you have only so much income and have to spend it wisely.  Dad’s point was that I should strive to make a profit with my personal income.  In other words, spend less than you make and invest what you don’t spend.  It was good advice, just not delivered in the right format.

I’ve heard people say things like “entrepreneurs are a rare breed”.  With millions of small businesses in the US alone I am not convinced that is true.  Business owners come in all shapes and sizes.  Some are liberals and some are conservatives.  There is no single defining characteristic to the small business owner.  And yet they all share one thing: they have experience in business.  Running your own business is a tough job.  I really enjoy reading articles filled with advice from business owners.

Ten years ago I would have found it hard to relate to these entrepreneurs.  But now that I have experience running my own household, managing the income and paying the bills, my dad’s advice rings true every day of my life.  And that means I can relate better to the business experience articles, too.

Here is an article where the writer says you should “be genuine; be valuable”.  How can you not relate to that in your personal life?  What this means is that you need to create value in yourself as a person.  That is true whether you clean the floors at the local school or run a multi-billion dollar corporation.  We all make mistakes.  We should all take pride in what we accomplish.  In other words, don’t forget who and what you are: you’re human.  And you have individual wants and needs and values.  And there are limits to what you can do for yourself and others.  All of that is important.  Don’t make promises you know you cannot and will not keep, especially to yourself.

In this article the writer notes that “small business goals are always shifting”.  That sounds a lot like the “boots on the ground” approach that successful military generals take.  Your business plan is a great starting place but if you find you have to make changes, you should.  And this is true when managing a household budget.  Maybe you’re saving for a vacation next year when you suddenly have to buy a new car.  Unexpected expenses happen.  And so do windfall profits, or unexpected financial benefits.  Maybe you lose a relative and inherit some money.  Maybe you get a big rebate.

Your personal goals should not be so inflexible that you cannot handle both good and bad events in your life.  If you have to make changes, make the changes.  Don’t wait until changes are made for you.  A personal lifestyle choice may be fun at first but if it’s too expensive a lifestyle you should change that before you end up mired in debt.

And a great final piece of advice I’ll share today is to “always have a contingency plan”.  Admit it: if you cannot predict the future well enough to plan ahead, you’ll be lost when your plan fails.  What are you going to do if something goes wrong in your life?  Say you lose your job.  Are you prepared to wait out the unemployment period?  You might get unemployment benefits.  You might find another job right away.  But what if the worst case scenario happens and you cannot find a job?  How will you support your family?  What will you do about your bills?

We can talk about emergency funds and saving up six months’ expenses, but if you don’t have all that in place right now what is your contingency plan if you lose your job tomorrow?  A savings plan is not a contingency plan.  A contingency plan outlines what you will do right away the moment something goes wrong.  It’s the difference between sitting in your bedroom while your house burns down and having the right equipment to climb out the second-story window.

It took me a few years to learn that lesson.  When my college car broke down on the highway (for the last time) I had to beg, borrow, and steal rides for a few weeks until I had the down payment and financing for a new car.  I hated going through that experience.  It taught me a little humility.  It also taught me to have a contingency plan.  Now I know how to get into another set of wheels right away if something happens to my car.  Sure, it’s called Enterprise Car Rental, but you know what?  It’s a plan that I can put into action right away.  I won’t be caught without a ride again.

That’s a life lesson a good small business owner should learn, too.