Most of us are familiar with the old saying “Hope for the best, prepare for the worst.” Although the origin dates back to the 18th century, the message could not be more relevant today, especially for business owners. From employee turnover to insufficient capital, there are numerous potential threats that could morph into financial disasters overnight. So, when Forbes Finance Council asked me to weigh in on simple steps businesses could take to prepare for such problems, I gladly answered the call.
Ramping up cash flow, factoring in personal credit, adding an actual line item for “unexpected disaster” in the budget – these are just highlights of the helpful tips my peers shared. Given my naval background and experience in project and portfolio management (not to mention Spinnaker’s analytical bend), I tend to gravitate towards a more systematic, orderly approach.
The gist of our recommendation? Prioritization is a must. Business owners must maintain a close eye on all fixed costs, and how they may change from quarter to quarter based on organizational growth or contraction. When it comes to variable costs, rank them in order of priority so that you know where you can and cannot cut when unforeseen disaster hits. Because we can always hope for the best, but we’ll be in a far better position for the long haul if we plan for the worst.
Interested in more intel from the Forbes Finance Council Experts? Check out our forecasts for the banking industry here.