There is an old Chinese curse, “May you live in interesting times.“ 2020 was a difficult year, surreal even. We were challenged in ways we never imagined. Without a doubt, we have been living in interesting times.
Suffering life challenges can be difficult, notwithstanding your financial situation. Issues of life and death are a primary example. The burden of many challenges, however, is relative to one’s financial situation. One’s ability to easily navigate adversity depends upon how you have structured your life and prepared for predictable challenges. Click To Tweet The more resources available, the better you can weather a surprise. You can mollify a crisis or avail yourself of opportunities. Do you have enough physical and financial resources available if required? It is good to have options.
This past week I was confronted with a non-life-threatening situation which is, nevertheless, a disruption. I learned that my favorite ride, my Nissan 350 Z Roadster is kaput. It is a sad situation as it is a well-maintained, clean machine. The body is in excellent condition, with no dings or scratches, and new tires all around. I must admit, it was fun to drive, and it complemented my image.
The problem is the transmission. It requires repairs that cost more than the fair market value of the car. To be honest, this wasn’t a total surprise as it is a 2005 model, with 175,000 miles of drive time. Other components need to be replaced, as well, including a new AC compressor, and a motor for the retractable top. I am happy that I deferred those repairs. They would have been a total waste, throwing good money after bad. Even so, I expected to enjoy the Z a few more years. After all, as a two-car family, it was driven less than 11,000 miles per year.
If this had occurred earlier in my life it may have caused greater concern. Fortunately, I have flexibility and options. Neither my wife nor I must commute to a job requiring each of us to have a car. We are both entrepreneurs managing home-based businesses. That fact alone moderates the temporary loss of one car. Yes, we need transportation to meet with clients, vendors, and colleagues. However, as we control our schedules, we can work around that issue. We do not have children at home, especially teenagers who need transportation. If so, I would be a bit more stressed. Today, we have additional options such as Uber and Lyft. I can even contract a short-term car rental. Clearly, I have options to cope with the situation.
The loss of my Z is a minor inconvenience. We have a lifestyle that reduces our dependence on automobiles, and the resources to recover. It can be instructive, however, for businesses and families especially with the Covid-19 pandemic fresh in our minds. We have heard about companies hammered by the lock-down because their business models could not adapt. Conversely, other businesses were perfectly situated to thrive in the lock-down. Still, others adapted with minor adjustments. Understand, the pandemic and related mitigating factors were not a complete surprise. Prominent people had predicted that a pandemic was an imminent threat. Even so, I have not heard of a single company that took the warning seriously enough to develop contingency plans.
As you have deduced by now, this post is not about the loss of my Z. It is about the way we organize our personal and professional lives to cope with risk. Life’s challenges are unavoidable and come at you fast. Fortunately, most are predictable. Given recent experience, you may want to perform a risk assessment. Maybe even segregate risks by time frame, i.e., one to three years, three to five years, and over five years. Then, determine the actions required to minimize those risks and their associated costs. With that information, you can determine the funds to set aside. If the risk is insurable, you will know how much insurance to buy. At the end of this process, you will have the framework of a disaster recovery plan.
It is good to have options! I will miss my Z. Life goes on.
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Jim Weber – Managing Partner, ITB Partners
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