We have experienced a very good run in business over the past decade or so. After experiencing a difficult recession, our economy roared back to life. Many of us have not only regained but grown our personal wealth as a result. It has been fun to participate in this Bull Market. Business conversations are much less strained when the biggest concerns you have are around managing your growth and not having enough employees. However, all business cycles have peaks and valleys. Anything that goes up will eventually come down (or at least slow down considerably). All waves do come crashing to shore even the beautiful powerful ones.

It’s important when times are good not to take this for granted. When the wave is cresting, ride it. Use this as an opportunity to pay down debt, make strategic investments, enhance margins and increase cash reserves. You can hedge your bets a bit more without worrying about too much market risk and/or volatility. It becomes possible to strengthen both your business and personal balance sheets. Up cycles are what make the responsibilities and rigors of business ownership/leadership worth it.

I do not have a crystal ball and cannot tell you when the next recession will come. I can only guess. There are some early indicators that a correction looms in our not too distant future. I also do know how long or how deep the next market correction will last. All I can say with certainty that it will happen and there will be some adverse consequences for most businesses.

My gut tells me that it is time for business leaders not to double down on high risk possibilities but instead to begin to take a more careful thoughtful approach. Don’t assume that relatively cheap debt will last forever, especially if you are vulnerable to variable interest rates. Lock in your rates now if you can. If you are nearing your debt limits or pushing against loan covenants, it might be time to tighten things up financially to free up a bigger cushion. Look for enhanced opportunities to increase your margins through better pricing and increased efficiencies. Do what you can to limit your company’s economic exposure.

The good news is that smart businesses can even benefit from a downturn. If others are struggling under the weight of bad or mistimed financial decisions, there might be opportunities for you to benefit at a reduced cost. All your competitors who just road the industry wave without doing anything special will be found out. You may be able to leverage your relatively strong cash position to negotiate better business deals and acquire other available companies and/or top talent. To paraphrase Warren Buffett, “when everyone else is nervous and selling, that’s when we gain our confidence and find our best buying opportunities.” However, you need to be in a strong economic position to do this.

Even though all waves do crash to shore, most of the water still returns to the ocean to once again reform in a new wave configuration at some point and time. Thank goodness business leaders are a resilient group. The best ones practice proactive not reactive resilience. They navigate not just where they are now but where the ocean current is taking them. They position themselves to ride the waves higher and longer than anyone else but don’t operate under the illusion that any given wave will not end. It’s the ability to stay in the water to keep finding and surfing waves when others can’t or won’t that ultimately makes all the difference to your business.