Protect Your Business in Good Times and in Bad With "Cushions" and "Parachutes"

All businesses have their ups and downs. With a few important rules and actions, it is possible to keep a business viable despite the inevitable hardships, downturns and negatives that come along. Here are a few things all business people should do in order to keep their business active and healthy as long as possible:

Cushions (what to fall back on when times are tough)

- reserve money in a special untouchable fund that is started in good times for the inevitable "rainy day(s)." It will help pay for inventory, labour, and other overhead. Leon's Furniture, for example, has weathered countless down times because it thinks about and acts in advance so the company survives through tough times.

- buy solid, protected investments instead of high risk stuff for your company just like you would for yourself as an individual. Treat a company as if it were a family.

- save in a special fund and buy cost-efficient upgrades when there are special sales or prices drop in response to downturns or reduced demand. Buy them as needed and get best value for your money.

- a knowledgeable and educated staff can work together as a team and perhaps keep the company going with their new ideas and solutions to the problem at hand. This means regular professional staff development. A team approach in a company gives people a vested interest in keeping the company going, not only to keep a job but for the benefit of all.

- establish and nurture valuable partnerships with other companies. Discuss and formally agree to the ways that each can help the team in good and also difficult times. Think of a consortium or co-operative. This could include: in-services, sharing staff development costs, regular meetings to discuss issues and possible solutions, sharing of new technology, working on joint ventures, suggesting and recommending other team members to do a particular job if your company can't do it.

- learn how to operate at an absolutely bare bones level and how to operate with a minimum of overhead when necessary. Do the math and paperwork which will be ready when and/or if you need it.

- get out of debt as quickly as possible and do everything possible to stay out!! Banks will call in lines of credit. Creditors can clamour for money which you may not have and are waiting for from someone else. Interest should be money you can't afford to give away. Live and work with REAL money, not borrowed money and within your means. Even if things take a little longer sometimes, you will be safe.

Parachutes (what will help you slow down a drop in business and prevent serious injury)

- don't over diversify your products and services but at least have enough that the whole company won't go bankrupt if one or two divisions fail. For example, a pool installation company can diversify into water purification supplies, yearly maintenance service, paid handyman workshops, pool landscaping service, pool toys, maintenance machinery such as pumps, supplying chemicals to hotels, Start working on some at a low level of energy and then kick them into high gear if necessary.

- hold meetings to list ways that the company could react or deal with bad times. Rehearsing scenarios could result in valuable preventive measures being put into place well in advance.

- use part of meetings time to discuss future additions to the company. Have study teams research and prepare feasibility studies, even if the idea isn't used immediately.

- regularly add to a special list of potentially new customers, areas of potential interest for your goods and/or services, and untapped sources of income e.g. an insurance company could consider selling insurance on pets

- nurture a relationship with various people who may become future angel investors that know your company and business well and may bail you out in difficult times.

- constantly increase your network of people in several key categories: customers, suppliers, finance providers, new markets, national and international, in areas related to subdivisions of your company that may be developed in the future e.g. a special education consultant meets an event planner to discuss feasibility of working together on a future conferences in the area of specialty

- make sure that your family and relations are aware of your business. They may be able to invest or bail you out in the future.

- keep a special book of nothing but ideas of any kind that relate to the growth and development of your business. Paper never forgets but the human mind does. How many company saving ideas have been lost because someone forgot to write down a great idea.

Keeping a business going is tough and a constant battle. Things always change for the better and worse. It is important to know what to do in good times and in bad so that your company or business can maintain some kind of equilibrium, be protected from bankruptcy and flourish or downsize with less stress and pressure.

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