Many years ago, around this time of year, I went boating with four friends up the Talkeetna River.

If you aren’t familiar with it, the Talkeetna is a rugged, remote Alaskan river, heavily braided with gravel bars and river rock.

It was a beautiful but cold day. Ice was beginning to form along the bank. We spent hours riding upriver. Then, in the early afternoon, Murphy’s Law kicked in.

First, the engine died. We couldn’t restart it. Because the river was full of gravel bars and much of the bank was covered with sweepers (fallen trees extending into the current), it was difficult to find a place to stop and work on it.

Then the rope holding our anchor broke, and we lost the anchor. We switched to oars, but one broke, and we lost the other. Then the drain plug somehow fell out of the boat, and we began taking on water. Two of us were knocked out of the boat and were soaked and freezing.

All five of us were experienced in the outdoors. But we had not prepared for this trip.

After hours of battling the current and gravel bars, it was getting dark. We realized we were going to spend the night on the river.

Eventually, we found an opening along the bank that we thought we could maneuver the boat into using sticks we’d scavenged. When we landed, the shore was covered with fresh bear prints.

We began building a shelter. I happened to have matches and a knife, so we were able to make a fire. Someone else had a sleeping bag because he hadn’t unpacked his gear from a previous trip.

And that was it.

We were embarrassingly unprepared.

After a long night spooning each other on the frozen mud, which was as wonderful as it sounds, dawn began to break. We broke the ice off the boat and continued our slow journey downriver, eventually making it back to our truck.

Are You Prepared?

It was supposed to be a quick day trip on a beautiful day. It seemed simple and we underestimated the conditions. As a result, we weren’t ready for anything.

I’m grateful things didn’t go worse.

Lately, I’ve been reading concerns from various business and economic observers that conditions may be developing for another major disruption, something along the lines of the 2008 recession or COVID.

They point to a combination of factors, including the rapid growth of AI, geopolitical uncertainty, inflation, high levels of debt, and major demographic shifts.

Personally, I feel like I’ve been listening to people predict the end of the world since I was a kid. Eventually, I imagine someone will be right. But so far, it’s not global disasters that matter as much as the very local and personal ones.

That being said, I think there’s value in paying attention to what these observers are noticing. They’re looking at conditions around us and saying, ‘This looks fragile. If something goes wrong, it could go badly.’

Kind of like heading up a remote Alaskan river without survival gear, first aid supplies, tools, or much of anything besides confident obliviousness.

I prepare differently for backcountry trips now.

Business leaders should prepare differently, too.

I don’t mean building a bunker and buying pallets of beans. But I do mean making sure your business is reasonably prepared to manage a significant disruption, whether that’s a global crisis or something that only affects your company.

Seven Questions Worth Asking Your Leadership Team

I encourage you to sit down with your leadership team and work through these seven questions. You may discover that you’re well prepared in some areas and more vulnerable than you realized in others.

1. Financial resilience: Could we withstand a 25% decline in revenue for six months? What if receivables slowed significantly? Do we have sufficient cash reserves or access to capital to continue operating?

2. Customer concentration: What would happen if we lost our largest customer or contract? Would it create an inconvenience, require significant adjustments, or threaten the business?

3. Leadership continuity: Could we function for 30 days without our CEO or another critical leader? Do we know who would step in, and would that person have the authority and information needed to lead?

4. Operational continuity: Where are we dependent on a single employee, supplier, facility, or system? What would happen if we suddenly lost access to one of them?

5. Technology: What would it take to recover if we lost access to our systems, data, communications, or banking? Are our backups and recovery plans sufficient, and have we tested them?

6. Adaptability: How quickly would we recognize that our strategy was no longer working? Do we have clear indicators that would tell us when to change course? Would our culture allow people to raise concerns and challenge assumptions before circumstances forced us to act?

7. Personal preparedness: Could an owner’s or key leader’s personal circumstances create significant problems for the business? Are there personal decisions, financial exposures, or other vulnerabilities that could threaten the company?

These Aren’t Hypothetical Threats

Through my work with clients and organizations where I’ve served on boards, I’ve encountered every one of these situations.

I’ve seen companies experience major financial disruptions because of poor financial management or customer concentration. I’ve worked with organizations where a critical executive unexpectedly died, was seriously injured, or simply quit without notice.

One nonprofit I served lost all its financial management and donor data when a server crashed. The IT company it had hired had never backed anything up.

I’ve also watched companies struggle because their leaders refused to adapt to changing economic conditions, demographics, or technology. And I’ve seen personal circumstances, including divorce, affairs, and substance abuse, create sudden and significant business problems.

These aren’t unusual situations. Every year, one or more of my clients will go through something like this.

The good news is that you don’t need to anticipate every possible risk or crisis. You couldn’t do that anyway. But you do need to understand where your business is vulnerable and prepare reasonable alternatives.

Our experience on the Talkeetna taught me something: We were all confident in our outdoor experience. And those abilities did help us get home. But we had confused our experience with preparedness.

Business leaders can make the same mistake. Years of success and a strong business don’t necessarily mean you’re ready for a significant disruption.

Take some time with your leadership team to explore the seven questions above. Identify your most significant vulnerabilities and decide what you can reasonably do to address them.

The right time to do this is when things are going well and you feel no urgency and no threat. You may not have the option to prepare later.

Take good care,

Christian

PS: Download my free Emergency Succession guide now if you’d like to be prepared for an emergency gap in leadership.