October 19, 2017
“My Zombie apocalypse plan is simple but effective; I fully intend to die in the very first wave. Seems more logical than undergoing all kinds of hardships only to die eventually anyway (through bites / malnutrition / or terminally chapped lips).” – Graham Parke, writer and humorist.
We survived the election of 2016 and while Democrats and Republicans, Liberals and Conservatives debate about whether or not we’re better or worse, as business people we need to ask ourselves if we and our businesses are ready for the next big crisis to strike?
Are you prepared for the upcoming Zombie Apocalypse?
Now obviously we don’t expect a real Zombie Apocalypse to take place, we’ll leave that speculation for fans of “The Walking Dead,” but by the same token the question is just a metaphor for asking if you and your business are prepared for a catastrophic event.
Most successful business owners will tell you that you really can never be too prepared in order to survive and you should always be ready for anything. As a friend of mine told me more than 30 years ago, there are two things you can count on in business. One, nothing ever goes exactly as planned. And two, it will cost you more than you thought.
“You can’t go into a $100,000 business with $100,000!” he said. “If you try to do so, you will fail.”
So, what do you do?
It’s not like you haven’t heard the saying before: “Hope for the best, but plan for the worst.” Unfortunately, hoping is for teenage boys at the high school dance who “hope” to get lucky. You’ve got to work your ass off and do so in a smart manner in order to be successful. But, most definitely the second part of that axiom could not be truer. Always plan for the worst.
Whether it’s a Zombie Apocalypse or an Alien Invasion, be prepared to do zero business for at least three months. Sounds extreme I know, but it’s a cushion that is essential for you and your business to survive. If your monthly overhead to maintain your business is $50,000, you should have a minimum of $150,000 available in reserve. The reality is you won’t do zero business, but you could do only a portion of what you had been doing and having three months of reserve could be enough to carry you through a long term drought. For example, let’s say you normally bring in $70,000 per month – that’s a monthly profit of $20,000. But all of a sudden a catastrophe hits and now you find yourself only doing 50% of your normal business. Instead of making money each month, you’re losing $15,000. By having $150,000 in reserve, your business can technically survive for almost a year (10 months), thus giving you more than enough time to do one of three things: (1) turn the business around, (2) make the difficult decision to close it, or (3) find a buyer and sell it.
While having the money on hand is always a good precaution, it’s not the only solution. As actor Dick Van Dyke once said about his career, “In general, things either work out or they don’t, and if they don’t, you figure out something else.” In other words, always have a Plan B. And sometimes it pays to have a Plan C, D and E too. Like I said earlier, nothing ever goes exactly as planned, so always have a backup plan or two for the unexpected.
While some experts will say having a Plan B actually sets you up for failure, because it takes your focus away from your Plan A, the shrewd businessman will tell you that having a backup plan is always a smart move. In many ways it’s just like having an exit strategy when you first invest in, buy, or open a business. You not only know what your vision is going in, but you know, or at least have an idea of how you plan to cash out of it when the time comes.
Having the philosophy “the worst mistake anyone can make is being too afraid to make one” may be great for someone with a ton of money burn, but for most small business owners that viewpoint is just unrealistic. Many small companies have their entire savings on the line when it comes to their businesses and making a crucial mistake at the wrong time cannot only jeopardize that nest egg and that business, but it can ruin relationships, friendships and even families.”
Now ask yourself and answer truthfully: Are you prepared for the upcoming Zombie Apocalypse?