Always Have A Plan B

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Whatever business you may be in, and whatever investments you may have working for you at this time, things can change abruptly. The year 2020 has been very strong proof of that, just in case anybody had any doubts.

Many people have watched their income reduced significantly or even reduced to zero for a time during this turbulent year.

They say chance favors the prepared mind, and that’s never more of a truism than when you are dealing with finances and money in general.

So what can you do to prepare your mind and your finances in the best way possible for possible future disruptions and upsets? Here are some key pointers:

Look at the infrastructure first

Whatever your business may be, there is probably some infrastructure, even if you are doing 100% pure investment for a living.

In that case you have at the very least a laptop and an internet connection to maintain. Or better yet, if you are serious about what you are doing, you will have two laptops and two internet connections. You may even have a UPS in case the power goes out, even if it never has.

If you are in real estate, the critical components will often be things like the roof, or your heating system.  Obviously it’s not possible to have two roofs, but what you can do is have it inspected, upgraded and kept in the best possible condition. Taking care of these things beforehand can lead to exponential savings down the road, especially in time and opportunity costs.

Whenever feasible, it’s a good idea to:

-Have backups for critical systems, and spares and/or spare parts.

-Upgrade critical parts of infrastructure and/or spend aggressively on maintenance to reduce risk.

-Build redundancy into everything

The art of contingency planning

Having said all of the above, it’s not that simple to have a good contingency plan. No matter how hard you try, you could still find yourself missing that one piece of equipment, or requiring emergency repairs despite the most diligent preventative maintenance possible.

This is when your network counts more than ever. Part of being prepared is knowing who to be in touch with at any particular moment to solve a particular problem when it comes up.

This is the crucial step that a lot of people tend to skip, but it’s even more key than the previous ones.

The proper way to go about this is to sit down and brainstorm. Think about all the potential things that could go wrong, and who you have in your network that’s capable of quickly and properly resolving the issue.

Depending on many factors, this person could be you in some cases, but in most of them you are going to need to reach out to someone. It’s a good idea to know who that person is beforehand.

It’s also a great idea to make sure that too much time doesn’t pass without talking to someone potentially important within your contacts, because you could find that they have suddenly moved out of town and can no longer help you.

Chance favors the prepared mind.

About the Author

Tobias Simmons is a personal finance blogger born in Ontario and based in Las Vegas, Nevada. He's no Doctor of Science or financial expert but is a self-taught student giving advice for the average peer.