Of course, if you plan ahead for any possible financial crisis, you will be in much better shape if it happens to you. But how many of us really take the time to have a plan or two waiting and the reserve capital to back it up? If your business is doing great now, it’s human nature to think it may always be like that. So you overspend, over-hire, and over-expand as if the cash flow will never end. Then, without any warning, sales and orders start to slow down. You may even ignore it in the beginning. You let down your guard and operate as if you have blinders on. But as your slowdown gets worse, you scramble to repair the damage and make adjustments that you hope are not too late.
This reminds me of a poker game I played in years ago. I was having a good night and winning a lot of hands. I took risks that I normally would not take, but most of them paid off. It was near midnight, when I was planning to leave, but the cards were coming great, and the other players were easy to read. I had a sales appointment the next morning at 9 a.m….but what could another hour hurt? After all, I was winning! So I stayed until 1 a.m., then 2 a.m., and then finally left at about 3:30 a.m., when I was well into a losing streak. I finally got to bed after 4 a.m. and caught a few hours of sleep, which was not enough to make me well rested for my appointment later in the morning. As a result, I was half-awake and late for the meeting, I forgot to bring some of the product literature, and I hesitated in answering some of the prospect’s questions. We didn’t get the order, and I had no one to blame but myself; I wasn’t prepared and didn’t treat the appointment as a priority. I thought we would get the business anyway, but we didn’t. I vowed to never let that happen again.
Planning for a possible financial crisis will put you in a better place to handle one if it ever happens in your business or in life in general. I don’t know anyone who has lived a long life who can say he never had a crisis or two along the way. These things can and will happen; don’t overlook or dismiss the signs and think the problem will go away. You wouldn’t do that with serious illness, so why do it for your business? A little preparation and the courage to use it when necessary can keep your business stable or even save it in some cases. Make a file called Financial Crisis and keep adding to it as you come up with new ideas. When you need them, these ideas and framework for survival and a quick recovery will be there waiting for you to use them.