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Ask Dave

Small Business and the Four Walls

Josh asks what the four walls are of a small business budget.

QUESTION: Josh on Twitter asks what the four walls are of a small business budget.

ANSWER: The four walls—what we talk about—are the four walls of your home, and when you’re behind, your first goal is to get current and keep your four walls current in order to keep the enemy away from your house. That’s food, shelter, clothing, transportation, and utilities. It’s the basics of life to survive.

I’ve never really done that for the small business, but I guess if you took the same concept and applied it to a small business, you would say, “What does it take for us to stay open?” I guess that would be the rent on the building that you’re in. It would be the utilities on the building that you’re in if you’re responsible for those. Team members—you would want to keep all of them, but to stay open, do you have to have all of them? That depends on your business. A lot of them, you don’t unless some team member does something that is very special and there are two of you and that person—they make the widgets, and if you don’t know how to make the widgets, you’d be out of the widget business if you had to let that person go.

You’ve kind of got to look through and go, what means survival in an absolute worst-case scenario in our budget? What means survival? That’s what the four walls are in our home, so I guess you could apply that to your business. Not what would I like, not what’s best, not what’s important, but what freaking means survival? That’s what you’ve got to look at.