Maybe we thought it could not happen to Bali again, but it
did. Just as the island was making a sterling recovery from
the impact of the 2002 bombing the dark forces of evil struck
again. Apart from the immediate and obvious victims there
will be few people in Bali who are not impacted one way or
another. Indonesia itself will suffer economic loss and more
harm to its international image although the world is starting
to recognize that the country’s leadership and people
are serious in their condemnation of the outrages and are
determined to combat them. The tiny minority who want to change
the world have no hope of succeeding but in defeat they can
still inflict damage.
Being prepared is a critical part of running a business
I have devoted several articles in the past to the importance
of being prepared for all eventualities. The events of the
past eight years, starting with the Asian financial crisis
and the collapse of the Rupiah in 1997 have reinforced that
need. After the first Bali bombing in October 2002 I know
of people who went immediately out of business as the flow
of tourists dried up. Others on the other hand struggled through
the difficult months that followed and eventually recouped
their losses when the recovery ensued. Why did some fail and
others survive? It usually boils down to money and planning.
When people go into business for themselves for the first
time they are often tempted to put all their savings into
the venture and perhaps borrow from the bank using their home
as collateral. Fine if the business is successful but if disaster
strikes, resulting in loss of customers in a restaurant for
example, then it can quickly result in a forced closure of
the business.
What are the chances of your being a victim?
While the statistical chance of a direct hit personally or
on your business may be remote, if it happens the consequences
can be catastrophic. It couldn’t happen to you? It has
certainly happened to people I know. Two of our group’s
clients died in the first Bali bombing. Another client of
mine was injured in two separate bombings in Jakarta! And
on this latest occasion a client was just 15 metres from one
of the bombs in Jimbaran. Mercifully she was not injured.
So what precautions should we take?
First of all we do not want to change our lifestyles and let
the people who want to create a miserable and cruel world
believe they have won. But there are sensible precautions
we can take. Having basic medical insurance is a must. An
emergency evacuation by special plane will cost at least US$25,000.
If you have dependents, think of the consequences for them
if you have no life insurance. Insurance for your employees
and property insurance is also a must but check the small
print so you know what it covers. The other precaution you
can take is to avoid the temptation to put everything into
the business. Keep a healthy reserve in the bank, preferably
an offshore bank if you are an expatriate. And don’t
neglect long term financial needs such as a pension plan.
If disaster strikes in later life and you lose your business
at least you will have a pension to live on.
What if you are not in business?
Even if you are in a business that is not immediately impacted
by events such as the bombing, there can still be repercussions.
If you are a teacher for example at an international or language
school your contract extension may be in jeopardy if school
numbers fall. Here again the aim should be to build and maintain
a strategic cash reserve in a safe location. A pension is
important too, but if it is to be one with a serious long
term commitment that cash reserve is even more essential.
Abandoning a plan in its early years can prove very costly.
Other strategies going forward
When there is a downturn in business the advertising budget
is often the first one to be cut. Marketing experts tell us
this is a big mistake. Keeping the name of your business at
the forefront during a recession will attract what custom
is still around when other businesses fall silent. A business
that has kept its image prominent during a recession is also
likely to among the first to recover and prosper when the
recovery comes around. And come around it will. Bali has shown
its resilience in face of all kinds of adversity. Don’t
give up; keep going – but always be prepared!
Colin Bloodworth is a senior adviser with Financial Partners
International. The opinions expressed are his own. If you
have any questions regarding personal finance you may contact
him at 021 520 8099 or colin.bloodworth@financial-partners.biz
