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Planning for the worst with a business start-up

Recessionary swings in the economy are an inevitable and unpredictable fact of life, similar to Gulf hurricanes and northeastern snowstorms. Just as with natural disasters, Denver business investors can protect their start-up company assets and future earnings by making plans for the next economic downturn. What works for a business in good times may quickly become a liability, bu there are some ways to prepare for a quick response.

The best time to begin preparing for the worst is when the coffers are flush. One of the actionable goals should be to consider acquisitions or joint ventures that expand current offerings without stepping too far outside the core market. A coffee shop purchasing a similar enterprise makes sense, whereas a move into children's apparel likely introduces too much risk in a recession. Another actionable goal during good times is reducing debt burdens. Paying off a business start-up loan, for instance, will reduce monthly costs by an amount that could become critical in lean times.

Other goals require action only at the time of a disaster. Advance planning can smooth transitions and help in avoiding costly errors. An example is envisioning how budget cuts could be applied to reduce operating costs without damaging cash flow.

Thorough business planning covers more than just how a company will succeed. It also includes crisis planning to show how a company will survive even when the worst happens. While such thorough planning could help in gaining access to venture capital or favorable bank loan conditions, it will certainly pay off in the long term management of the business. Legal counsel with experience in business start-ups can provide more information on this topic.

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