When it pays to have a Plan B

Wide-lightening
Wide-lightening (Photo credit: Wikipedia)

I sat in the living room writing this in the fading light unable to turn on the lights. The electricity crashed in a heavy Highveld thunderstorm. Traffic lights were out too.

What do you do in these sudden and unexpected circumstances?

Improvise. Candles for light. Gas cylinder for boiling water to make coffee. Alternative plans to eat supper … in a shopping centre with back-up electricity power running off a generator.

Fortunately, this time the electricity service company restored power in time to watch the second half of the South Africa-Ireland rugby match.

But it got me thinking about small business and back-up plans. How do start-ups and small ventures plan for unforeseen circumstances?

In life and business if something can go wrong, it will. Murphy figured this out long ago.

Small business should be wary of these rules of thumb: starting a business will take three times longer than you thought it would; and your projected costs will be double what you projected. Even though your early market buys your product, you will need to find new niches or new applications for your product to continue to thrive or sometimes, to survive.

Small business owners solve most problems with… you guessed it — money. That’s why it’s important to have a Plan B stash to tide you over during tight spots.

But it’s also critical to have a Plan B in case your business does not pan out as expected. If your market suddenly dries up or your technology is out-of-date almost overnight, what will you do?

It may seem like toying with fate or being too negative to think through the worst that can happen. Yet some larger businesses develop business continuity plans for effective prevention and recovery against internal or external threats.

Just one before I go — keep a watch on your bookkeeper. Even if the person looks honest as an angel, don’t be fooled. It’s painful to remember that an “honest” bookkeeper bankrupted a 25-year-old business that I once knew.

I’m not going to buy a diesel generator for next time the lights go out but I will buy a backup light charger and a refill for the gas cylinder.

 

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