Have an emergency fund
Always be prepared for a downturn, advises Tobias Dengel, CEO of WillowTree, a mobile and web application development company. “This means having some dry powder in the bank that can get you through a business pullback, or [allow you to] take advantage of a market downturn to invest or even buy a competitor,” he says.
Michael Alexis of Museum Hack, a creative museum tours company, swears by his “three-month emergency fund.” “In an extreme case where the market completely shifts, our ‘emergency fund’ would allow us to continue paying our staff for three months as we work to find new revenue sources or an updated business model,” he says. For individuals, that rainy-day fund can cover an unexpected job loss or medical crisis, and by using a “three-month” metric instead of a specific dollar amount, the fund grows in proportion to your expenses.