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Benefit from Boom and Bust

How to profit in a fluctuating economy.

This story appears in the July 2006 issue of Entrepreneur. Subscribe »

As I write, the economy is strong. Yet, as we all know, every boom is followed by a bust. Every up cycle is followed by a down cycle. So when things are good, that's the time to prepare for when things will be bad.

Over the years, I've seen entrepreneurs make three mistakes during boom-and-bust cycles. The first mistake is made when times are good: Entrepreneurs begin to spend. With increased confidence, they expand their businesses, hire more people, buy bigger houses, lease new cars or have more kids.

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