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How Small-Business Owners Can Prepare for the Next Pandemic

Major disruptions happen every few years. Get staff retention plans, flexible contracts, and a cash buffer in place now.

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Illustration: Gwendal Le Bec for Bloomberg Businessweek

In 2020 we all learned that business income can dry up almost overnight, and that another major crisis may be just around the corner. “The biggest mistake is not planning for bumps in the road,” says Dan Crompton, a small-business coach with ActionCoach UK in London. “There will be a big event every five to 10 years,” he says—an economic downturn, a pandemic, political upheaval such as Brexit. Here’s how to prepare for the next disaster:

1. Prioritize cash in the bank. When whole industries ground to a halt last year, survival depended on how long companies could survive on the money they had stashed away. “Cash is the true sign of health of a business,” Crompton says. He recommends having enough money to survive at least three months with no income, but six to 12 months would be better. This goal should be prioritized and tracked quarterly, he says, along with sales and profits.