Business Warriors: Your FREE Recession Survival Tips

In times like these where nobody knows what horrors next week holds, we'd like to share some ideas to help you survive.

There are 10 Key Tips in this portfolio. This page is the first. The other nine are yours in a series of emails over the next 27 days. (After 10 years of teaching business owners via email and websites, experience shows that we assimilate ideas much better in small doses.)

This short course was developed for Business Warriors (as business managers, and in their private roles) since most of the advice being given in the media these days might work well in normal times. But these are not normal times, and much of that advice is very bad for you.

I was chatting to a local business owner recently about this recession thing. He told me he was repaying his debts as fast as he could, especially his mortgage.

I know that this is the current mantra, the current best practice, but it seems to me that this is the worst thing you can possibly do right now. Here's why.

At some point in the next few years each of us will run out of cash. (I did in January with some big one off expenses.) At that point, that small cashflow issue is the trigger for a huge range of consequences:

• The debit bounces out of your cheque account and this stops any future credit stone dead; 
• The firm wanting the payment now doesn't much care that in January you paid in extra cash, especially if that was to reduce a debt elsewhere;
• Suddenly, instead of being up to date, you're in arrears, despite being an excellent client this far;
• If the situation progresses, your car or home gets repossessed anyhow, and the extra money in it is lost;
• which means that the advice was really bad because we have no idea what's going to happen later in the year.

By repaying our debt earlier than we have to (which is the reducing the sum of all our existing credit lines) we're encouraging a future catastrophe. 

A few of my credit cards have recently written to me to reduce my limits! The faster I repay them the less they want to lend me because they're so exposed to bad clients! How bizarre.

We're repaying our debt in the expectation that our credit lines will remain in place. 

That's not true. Our credit lines ride on a bankers whim, and there are far too many reasons for that whim to change - all of which have little to do with us. The utter chaos in the world banking industry should show us quite how much in control they really are.

Imagine your bank noticing an increase in defaults in Gauteng. You're not a defaulter, but your bank pre-empts the situation by lowering limits for all folk in Gauteng. Suddenly you have less working capital than last week. You're on the road to becoming a defaulter. The bank fulfills its own prophecy, and the clever fellow that spotted the trend gets himself a moerse bonus for saving the bank so much money! 

All the Western Governments are pumping money into their economies as fast as they can. They've exhausted monetary policy. They openly admit that they do not know what they're doing. 

Paying back your debts from today's (uninflated) income is expensive. It trashes your personal credit lines, with no guarantee that they will be in place when you need them. It is another case of behaving 'sensibly' in unsensible times. 

 

PS

If you'd like the other nine ideas, over the next three weeks, please complete the section below. I will not share your email address. I will not waste your time. And at any time you can stop the emails with just one click.