Plan for zero
Posted: 27 Jul 2015 04:01 AM PDT
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How do
wheat farmers survive the ups and downs of good years and bad years? They
Plan for Zero. Photo by Becky McCray.
There will be times in business
when your income is zero. You might as well plan for that right now.
For farmers, a wheat crop might be
entirely hailed out, and they may lose the entire year’s income. They have to
plan for that or it’s going to put them out of business. The same thing can
happen to any business. There will be times when at least part of the
business generates zero income, whether that’s a zero for the month or a zero
for the year.
Small town people use a couple of
different tactics to plan ahead for those lean times. One tactic is to think long term. Knowing
that I have to plan for five years of really variable income, what I can do
now to make that better? That’s taking a really long term perspective.
When my friend Rob Hatch‘s business received a
windfall of unexpectedly strong sales, he said he kept thinking to himself,
“plan for zero, plan for zero.” So he set aside money for future lean times.
That’s taking a long term perspective.
The other tactic is
cultivating multiple lines of income. This also
comes from farming. If you know that your entire wheat crop may fail, then
you may also plant milo or soybeans, or you may take in livestock and raise
cattle to help even out the variation.
That’s also something that any of
us can do. We can look at our business and say, “What would be another line
of income that would be compatible here that would help even out some of the
volatility that I know we’ll face?”
Small town people also extend this
further, to even unrelated businesses, like say a liquor store and a cattle
ranch. When the cattle market is headed down then we like to hope that
the liquor market at least will be stable or maybe will be up.
Plan for Zero is one of the Small Town Rules
that any business can use to thrive in today’s economy.
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Monday, July 27, 2015
Plan for zero | SmallBizSurvival.com
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