Vail Daily column: Is your business prepared for the unexpected? | VailDaily.com

Vail Daily column: Is your business prepared for the unexpected?

Well here we are. Snowflakes are beginning to fall and it's already the last week of November. Who would have expected it to take this long? The torturous election season is, well … almost behind us. Who would have expected a finish like that? OK, I promise that will be my last political reference. The Dow is now 35 percent higher than where it was before the great recession and a barrel of oil is 56 percent lower over the same period. Please show me someone who expected that to happen. The World Champion Broncos are not dominating the AFC West. What diehard "rest on your Super Bowl laurels" Broncos fan would have predicted that? Oh, and the "almost" World Champion Steelers are not doing much better. I just had to say that. My point is that we live in a world of uncertainties where the unexpected is lurking just around the next corner.

Everyone has a business

In these times, it is more important than ever to make sure your business is prepared for the unexpected. Now you may say, "I don't own a business." But as I have tried to explain before, everyone has a business whether it is taking care of your home and kids, running a retail establishment, directing a Fortune 500 company or working 9 to 5 for someone else. Everyone has a business.

How well prepared is your business to handle the next unexpected bump in the road? Obviously having a bank account with excess funds is very helpful in those times. But let's face it … how many people can say they have socked away enough in reserve to weather the next storm? Even if you can, the question then becomes, is the reserve earning a proper return? That's a subject for another time. For most people and businesses, ample cash reserves do not exist. A personal or business line of credit can be very helpful in this situation. However, they need to be handled properly.

Whatever way you prefer to nurture your friendships, make sure you take the time. You will be glad you did when the unexpected comes.

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Customer Base

Remember we are talking about being prepared for the unexpected not borrowing money to use for current wants and needs. Unless you have a seasonal business that requires preseason purchases or a business that has highly variable cash flows, you should never touch your line of credit. If your line cannot "rest" with a zero balance for at least 30 days at a time, then you are not using it properly. Quite simply, if you have a line of credit that is always being used, then it will be of no use to you during the next unexpected bump in the road.

What about your customer base, or as I like to call them, your friends? Are you doing enough to nurture those relationships. You may be asking, "What does that have to do with preparing for the unexpected?" It will be those customers and friends whom you have built strong ties with that will support you in tough times and help you through the unexpected. Regular contacts are important, or should I say, imperative. There are so many ways to do this. It can be accomplished through a complex marketing plan or through a simple phone call. Relationships can be built on the golf course or at a dinner table. They can be built on the ski slopes or on the other end of a cell phone. Yes, they say even Facebook and Twitter can build relationships. Whatever way you prefer to nurture your friendships, make sure you take the time. You will be glad you did when the unexpected comes.

Fine-tune legal situation

Is your "legal" house in order and prepared for the unexpected? Does your business need to be incorporated? Should you form an LLC? Should you switch from a partnership to an LLC? Does your partnership have a buyout plan? Do you have a will? Do you need a pre-nuptial? Consider the sudden death of a partner, or key person, and how that could affect your business. Are your assets safe if someone files a lawsuit? What about divorce? No one likes to talk about it but nothing in your business or life goes untouched when divorce is involved. As you can imagine there are so many considerations in regards to having your "legal" house in order and protecting you from the unexpected.

Every situation is different but you should stop and consider what steps need to be taken so that you are ready for the unexpected.

Now I don't want to sound like a Negative Nancy. Where did that term come from anyway? So … are you prepared for the day when you win the lottery? Wait … this article is about the unexpected. Everyone expects to win the lottery someday. Think about it, Darlin' (that's for all you Jerry Jeff fans). But seriously, think about it. The unexpected can include windfalls like a start-up business on a fast track to national exposure or landing that huge contract or, on a personal side, receiving a large inheritance. It could happen. Are you prepared?

Insurance Coverage

Many of the unexpected events in life can be managed with proper insurance coverage. Do you have the right coverages? The right limits? The right insurance company? When was the last time you had a meeting with your insurance agent? After 56 years of breathing mainly nitrogen and oxygen, I have yet to find someone who enjoys paying the monthly insurance bill. However, after those same 56 years, I can tell you making those payments sure helps me sleep. If you haven't had an insurance checkup in the last two to three years, you are not prepared for the unexpected.

What is the unexpected?

By now you have probably figured out that I am trying to get you to take a good hard look at your business (whatever it may be) and determine if you are prepared for the unexpected. I realize there is so much to consider. So, cut this article out put it on your desk and tackle one area at a time — except for building those relationships. That needs to be done every day.

An important thing to consider is that no one can, or should, do this alone. Consult your friends, colleagues, and professional acquaintances. If you need assistance, then consider joining your local chamber. There are specialists in these areas that are members of most business organizations.

The big question remains … what is the unexpected?

Larry Cavanaugh is market president, Vail, for Centennial Bank and Trust and a member of the Vail Chamber & Business Association board of directors.