Prepare for the Unexpected When events take you by surprise, you need to be able to handle them properly. How prepared are you?

Q: How can I better prepare for the unexpected in mybusiness?

A: Your business can be zooming along, making profitablesales, creating happy customers, generating strong cash flow...andthen suddenly, an unexpected event can come out of left field andwipe you out. You may not have given this possibility any thought,and I hadn't either--until I had just such an experience withmy home-building business.

Things were going great. Sales were up, and we were starting toreally take off. Then one day--out of the blue--we got word thatour liability insurance carrier was pulling out of Alabama anddropping all of its clients immediately. In the home-buildingbusiness, if you don't have liability insurance, you can'tget building permits. Just that quickly, we were shut down.

I talked to what seemed like every insurance agent in the world,and when they found out we had been in business for less than twoyears and weren't currently insured, they told us that theydidn't know of anyone who would insure us. The fact that we hadnever had a claim didn't matter. I finally was able to get onequote for $65,000 per year. (We had paid $4,800 the previous year.)Talk about being between a rock and a hard place--taking that muchfrom the bottom line of our three-person business would have sunkus. After much more searching, I finally found a carrier that wouldinsure us for $16,000 per year, with other conditions that wouldraise that amount to closer to $25,000 and cause me to spend anenormous amount of time on paperwork. We wound up taking that dealbecause we had no choice. We had never considered that this mighthappen to us.

The point is that you just never know what surprises await you,but you have to do your best to be ready for the unknown. Somethings are out of your control, but others can be prepared for ifyou think ahead. Consider a couple of examples:

What would you do if you got to work on Monday and found aresignation letter from your top salesperson, who is leaving tojoin your competition? What if your banker dropped by to call yourline of credit?

When news like that takes you by surprise, it can be hard tohandle gracefully! The time to prepare is now. Think about what youcan do now to prevent such events or at least lessen their impact.You could work to improve your relationship with that topsalesperson and structure your organization so that it isn't sodependent on one person. You could work to understand how yourbanker thinks and what he looks for in your company. You could alsoform relationships with more than one bank to counter the effectthat a change in management or policy at one bank may have on yourbusiness. If you aren't thinking about these types of issuesnow--and aren't on the lookout for things that could possiblygo wrong--you won't be ready for any of them.

This is a hard subject to define. It's easy for us to comeup with a couple of quick examples, but how do you think about thebig picture and plan for things that you don't know about? Theonly advice I can give you is to allocate some strategic time eachweek to looking at different aspects of your business and askingyourself what could go wrong. Make a list of each scenario and thendecide what you would do to prevent it, reduce the odds of ithappening and reduce its impact if it does happen. Then look atthat list and work on the most important things. You can'tprepare for everything, but the more things you think about now,the more you'll increase your odds of long-term survival.

Keith Lowe is an experienced entrepreneur who is a founderand investor in companies in several industries. Lowe also mentorsnew entrepreneurs; serves as past chairman of the board forBiztech, anonprofit high-tech business incubator; and is a co-founder andofficer for the Alabama Information Technology Association.