Play defense with a good offense

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Play defense with a good offense

By Anna MaskerIn standard22nd December, 2008

I am not a huge football fan, much to my husband’s dismay, but I do follow Peyton Manning, quarterback of the Colts. If you have ever watched Peyton play, then you know that he studies the formation of the defensive team and adjusts his plays accordingly, often seconds before the ball is snapped.

Similarly, as quarterback of your business, you need to be able to adjust your plays based on changes in market conditions. While I don’t believe anyone could have predicted how widespread the impact of the credit crisis would be or how deep or long the recession will be, you can call the plays as you see them. As a small business owner, you must run different scenarios to understand what the impact of a 10%, 20%, or 50% downturn in the market will do to your business.

Just as Peyton has a number of different plays that he can call, you should have an idea of how you will handle different situations and their impact, not only on income and expenses but on cash. You will also need to know if you will have enough cash or available funds from a line of credit to hire that employee or buy a piece of equipment or expand into new office space and repay the loan. What happens if a key customer starts paying late? Can you still make your payroll and pay the rent?

Smart spending, smart cash management, and smart planning are, collectively, a great offense and the best defense.

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