Dr Jeff Cornwall

Drakeview linked to my recent post “What If?” in which I talked about the need to plan ahead for the possible aftermath from another terrorist attack in their piece about the importance of security programs. They cite a Conference Board survey on security programs in companies of various sizes. Security programs are designed to help businesses plan for the inevitable “bumps in the road” or even “major road blocks and detours” that inevitably get in the way of day-to-day operations of any going concern.
“Security is strongest among “critical-industries” those that typically have to dedicate resources to make sure that their essential products and services are reliable and available – transportation, energy and utilities, financial services, media and telecommunications, information technology, and healthcare. They have a lot of experience with minor recurring service disruptions brought about by weather or natural disaster. They can prepare for a somewhat reliable set of circumstances – hurricanes are going to blow, blizzards are going to fall, forest fires are going to burn. Only the date and duration of these events are unknown.”
Small businesses are the least prepared, and the most vulnerable. In addition to the suggestions I raised, they point out that it is possible to purchase insurance to cover such losses. It is not a standard part of business insurance in many cases, but it is probably worth considering adding such coverage, for as we all know, “stuff happens.”

Paula Lovell sent me this article about the explosion of students starting businesses while in college. It is happening on almost any campus in the country these days. More evidence that the entrepreneurial economy is alive and well.
One of the first new programs that we opened when I arrived at Belmont is our Student Business Hatchery, which is designed to serve just this kind of entrepreneurial student. It is a two room office that provides the basic business infrastructure to support students running businesses on campus. They have access to computers, a fax machine, a copier, file space, and conference table, and so forth. All resources are shared on a cooperative basis (first come, first served). Any student who has a business up and running (or at least close to up and running) is eligible, no matter what major they are studying. If they believe it could help them in running their business, they fill out a brief application and are admitted to the program. In the first year at our small university we had twenty students representing eleven different businesses (most formally incorporated) in our Hatchery Program.
Due to its success, we will be expanding the Hatchery Program this year to include a second location on campus to serve more developed businesses. This expansion is funded in part by a grant we received from the Coleman Foundation.
Several of the students who operated businesses in the Hatchery last year have graduated and are now working on these ventures full time in the outside world. We continue to offer advising and networking assistance, but they are launched from the Hatchery into their own space. They are beginning to hire employees, buy equipment, etc., helping in their own way to expand the entrepreneurial base to our local economy.

This week’s Carnival of the Capitalists has a particularly rich collection of posts. Visit it today at Business Evolutionist.

In a small business everybody is really part of the sales team, since most employees will have some interaction with customers. And yet, many small businesses overlook this in their training as shown at this entry at An Entrepreneurs Life.

What if? There has been a lot of discussion among the politicians, political pundits and bloggers about this question as it relates to the possibility of another attack on America. In fact, many of the discussions sound more like “when”, not “if”. How would it impact the election? Should we postpone the election if the terrorists strike again? What would our response be this time and toward what country? All important questions to think about, and to talk about, right now as cooler heads prevail.
So why should a business blogger be talking about this? Well, I think that entrepreneurs should be asking similar questions. And, they should be asking them now. Not in terms of any lofty public policy issues, but in terms of how it would affect their businesses. Entrepreneurs I talk with certainly are thinking about this, at least in the back of their minds, but any discussion tends to always end up like they are whistling past a graveyard. Maybe we’ll get lucky and nothing significant will happen, but the probability is high enough to warrant attention by any business owner.
How do you start thinking about the unthinkable? I would suggest the best place to start is with hard data. Examine what happened to your business and your industry after 9/11. History is never a perfect predictor of the future. If another attack happens to our country it could be worse, or we as citizens might not respond in the same way. But, history offers the best data we have to plan from. So the place to start is with your experience from 2001. And if you were not in business then, talk with those who were. Learn from those who weathered the last attack.
Here are some suggestions on how entrepreneurs can be preparing:
1. I would suggest for any business that the cliche’ “Cash is King” has never been more true. After 9/11, there was a prolonged period where many businesses almost ground to a halt. Having cash reserves will allow businesses to make it through the initial economic paralysis that will likely occur. Thirty days cash reserves (enough cash to cover essential and fixed expenses) would be my minimum recommendation. Even ninety days of reserve would not be too much to have at this period of time.
2. Good advice any time, but certainly now, is to manage overhead carefully. Overhead pushes the breakeven point of any business higher. If sales suddenly drop off for an extended period of time, a lower breakeven point that results from lower overhead expenses can soften the impact of any economic shock.
3. Whenever possible, avoid fixed, long-term commitments that are part of a static business model. Any major shock on a market may require new business tactics, strategies or even models going forward. One reason buy generic topamax online that the American auto industry reacted so poorly to the oil shock in the 1970s is that they had built their businesses assuming a very static business model. It literally took them years to undo this model and adjust to the new reality that they faced. They had to be able to react much more quickly to changing customer preferences, and operate in a market with many new competitors where there used to be only three.
4. Build in flexibility in all decisions. Understand that you may need to quickly undo some decisions that now make sense. Make this as easy as possible for you to accomplish.
5. Watch and manage your inventories carefully. Although the current economic expansion is being somewhat hampered by tight inventories, I now believe that this is a prudent strategy. Certainly you should not choke your business growth, but don’t go overboard with purchasing either. Purchasing raw materials or other inventory using volume discounts may not be wise. Be as “just in time” with your inventory as possible.
6. Think through the ‘what ifs’ and create contingency plans. These need to be major plans for how your operations will be handled given a variety of scenarios, and minor plans that deal with the day-to-day safety and security of your employees and customers.
7. Critically important is for all of us to look beyond any single event. After 9/11 we suffered economically in part because there was a collective “hunkering down” due to the shock of what had happened and the complete uncertainty of what was yet to come. Now we have experience, and we need to use it to envision what we can accomplish in the days, weeks, months beyond the inevitable initial shock and horror created by another attack on our land. Believe in your business and believe in the system that makes it possible. We will need bold leaders, not just at the political level, but within the grassroots of our economic system. Be strong, be brave and be confident and others will follow.
I am not trying to contribute to any public panic. To the contrary, I just want to advocate prudent preparedness. This is one of the most important lessons of 9/11. Part of how the terrorists win is determined by how we react in the aftermath. The economic collapse of America is one of their fundamental goals. And as I have written previously at this site, I truly believe that given the entrepreneurial economy in which we now live, entrepreneurs will be the economic foot soldiers in the aftermath of any future attacks. Winning the current war against this evil will be measured in large part by how resilient we are as a culture and as an economic system, since they are at the heart of what the terrorists are trying to destroy.