MONEY & THE ENTREPRENEUR. The `juggling act' of business and family

JUDY Marchik got a boost into self-employment from President Reagan. ``In 1981, Reagan became president,'' Ms. Marchik recalls. ``I was working for a company that did cost-benefit analyses for hospitals under federal contracts.'' After the first Reagan budget was introduced, many of these federal contracts were not renewed.

``Several of us saw the writing on the wall and left,'' she says.

She and three partners then started Quality Decisions Inc., in Minnetonka, Minn., a suburb of the Twin Cities. The company does the same kind of work she was doing before, except now they specialize in evaluating health care providers for organizations that serve senior citizens.

Marchik's experiences as an entrepreneur are similar to those faced by many self-employed people, particularly women, who have to support themselves and a family, provide insurance, save for college, and put aside something for retirement.

``I'm a single head of household with three children,'' she says. ``I have two boys just out of high school and a daughter who's 10 years old.'' Marchik was married when her company started but divorced two years later.

When she started the company, she acknowledges now, she should have done more thinking and planning about her own personal finances beforehand.

``I did a little, but not as much as I should have,'' she says. ``Ignorance is bliss. I was totally ignorant about what the costs would be.''

Her familiarity with the financial needs of older people gave her some incentive to start a retirement plan, though it was modest at first. ``Retirement was one of the few things we looked at,'' she says. The firm now has a qualified retirement plan that receives a share of the profits each year while she and her partners can add more.

Because she was still married when the company began, Marchik's medical insurance was covered by her husband's company, so she didn't have that expense for the first couple of years.

(Other entrepreneurs may be able to ease this burden when they are starting out, too. Some companies will let former employees continue to receive health care coverage - at the employee's expense but at a group rate - for up to 18 months after they leave the firm.)

While her ex-husband pays part of the college bills, ``my sons knew all along they would have to save for part of their own college expenses,'' Marchik says. ``We talked this over as part of the family's overall financial picture.''

For a while, she says, one son thought he might want to attend a private school in another state. Fortunately for the budget, he found an engineering program that fit his interests at nearby Mankato State College.

Looking back on the first years of the business and her family's financial progress, Marchik says, ``It was like standing still for five years.'' Her own financial planning not only had to be put off, but she had to use some assets she had already put aside.

``We tapped all our resources,'' she recalls. ``We called in our insurance policies and borrowed on them, for instance. We've been successful enough since to give ourselves some security, but it was like I lost five years. Whatever people tell you to plan for in meeting the expenses of the business and your own financial needs, it's like that in spades.''

At first, she says, handling the business and the family's finances ``was like some kind of gigantic juggling act. It was a successful juggle for us, because we started to see some real income.''

While it is often hard to take the time to research and learn about the various personal finance options available, Marchik says the time should be taken.

``We started with an accountant, but we really weren't getting the answers we wanted,'' she says. She then went to a financial planning firm where a broader range of options could be laid out for her.

``Most people come to a financial planner a year or so after their business gets started,'' says Kristi Fitzer, a Minneapolis field service representative for New England Financial Advisors, a subsidiary of The New England, formerly New England Life Insurance Company. Ms. Fitzer's firm worked with Marchik on her financial plan.

``The fact that entrepreneurs do or do not have financial security for a few years does not create a crimp in their life style,'' Fitzer says. ``After we've achieved success, they say, then we'll talk about our own finances. Most will take care of insurance, especially life and health, right away.''

Many entrepreneurs, Fitzer says, often seem to have a higher tolerance for risk, and this tolerance applies to their personal lives as well as to the business. If they don't take steps on their own to mitigate some of these risks and protect and provide for their family's long-range financial needs, then someone else, like a financial planner or accountant, should do it for them.

``Most people who feel they are successful and intelligent feel there isn't anything that can ever stop them,'' Fitzer says. ``They're very confident.''