Extreme entrepreneur makeover: Rich ideas, poor money planning

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Samantha Garner, age 55, lost her job and 3 years ago started her own retail shop, which sells mostly artsy home furnishings. Her fiancé, who lives with her, lost his job and now works for her. Samantha also helps to support her extended family.

Samantha wants to eliminate her credit-card debt and secure a $500,000 loan to expand her business. She has two homes that are valued at $400,000 each (her mother lives in one) and is trying to secure a mortgage loan modification to prevent foreclosures. Her business grossed $255,000 in its first 2 years but now is struggling. Her goal is a lofty $1 million in sales by 2013.

The advisers whom we contacted about Samantha’s plight all came to the obvious conclusion: “Simply said, [Samantha] needs to increase her cash flow without increasing her debt and at the same time address her financial responsibilities,” says Erika Safran of Safran Wealth Advisors.

First, Samantha needs to pay down her debt. She should consider selling one of her homes, Safran says. Perhaps she can live with her mother, adds wealth manager Karen Lee of Karen Lee and Associates.

Next, Samantha needs to prioritize her financial goals and streamline her business. Samantha designs wedding dresses and furniture, finds artists’ works and “does the marketing, sales, accounting, legal ... it’s too much,” says Charles Schwab vice president Casey Mervine. Samantha should focus on a few things that she does well, he says.

Several experts suggest that Samantha’s fiancé should seek outside employment, which has the potential bonus of yielding health insurance. Ultimately, Samantha needs to learn to say no to at least some of those who demand her financial assistance, Mervine says.

S. Berg