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billbenson
08-27-2008, 08:48 PM
I watch a friend of mine's kid who lives in a somewhat rural area making 500k a year as a sales guy selling to the housing market in a housing recession and I think of me. He's mid 30's, expensive house; expensive car; kids, etc.

I had a career that I thought would last forever. It died in the dot com crash in 99 never to return. Within 2 years my knowledge of the new technologies and ways of marketing were obsolete. I had no backup plan. 1 in 7 people in my career are still working in that field. A lot are selling real estate which ain't the greatest now.

If my friends kids company goes down the dumper, he's stuck needing to move, sell and expensive house, etc., in a lousy job market. It will be bankruptcy time. Even if he has $500k in the bank, I don't think he could recoup. He still is young enough that he is employable. For me, I was hitting the age bracket where companies were looking for younger workers.

There are "hot" jobs listed today. Pharmacist comes to mind. But if it gets to popular, it could become saturated or the industry could change. If a pharmacist at 50 looses his job because of some market change for whatever reason, whats he going to do?

One of my biggest errors was thinking that one of the hottest industries would go dead. Poor money management young also contributed, but how many 30 year olds really do good money management? You are still at that invincible age.

A reasonably good backup plan is having a wife / husband in a different industry. Doctor / Lawyer for example. Either one could loose their license to practice, but the other one could cover. Of course there is always that divorce thing that muddies things up here and there.

I don't have an answer, but for the younger people out there, it's more than just good money management. IMO studying other industries and giving yourself a good backup plan should be part of it as well.

Just something to think about.

Blessed
08-27-2008, 10:53 PM
I think one of the key components to a backup plan is to not have any debt, except maybe a modest house payment.

We got caught in the "we're both working so we can buy all the toys we want mode" and we're paying for it now... through hard work, lots of cheap dinners and cutting out the extra's we were able to pay 20K in debt off last year - this year it's a little tougher because I started working from home and we have a baby but we're still making a dent in our bills - we're down to owing less than 25K on things other than our house (that includes our boat and one vehicle - we paid the other one off) I'm thankful that we are making progress but we still have the debt and that is frustrating. Although... if we sold a few things we could quickly cut that 25K in half almost overnight so knowing that helps!

orion_joel
08-28-2008, 01:31 AM
I think that there are a few keys to not just having a back-up plan, not just to cover in case something goes wrong, but to actually continue moving forward, and not actually ending up at the point that something is going wrong.

1. Diversify - Not really career related, as it would be quite difficult to work on two or three full time career's at once. But this is more so investment related. If investing in shares, spread your risk over a number of different market segments, eg find the top company (preferably in the top 20) in 4 or 5 (even up to 10) and invest across them all. This means that maybe you will not maximize your returns on one fast growing company but you will also not be at the same level of risk where if one investment goes backwards, you lose it all. It is rare for all industries to be losing at once, so you often have potential with this sort of share strategy to grow your investment even in bad times.

Diversify, also means you should be looking at multiple investment vehicles, For example don't just invest in shares, get some property, maybe some precious metals, or something else of your choice, and keep some in interest bearing deposits.

2 - Expanded skillset - This more so relates to your career, rather then building a single set of skills that relates to one industry only, try and develop a skill set that can be applied to numerous industries. While there are many industries that this is hard for example as you mentioned Bill, the Pharmacist, this can be tricky, as especially when you have been doing something for 20 or 30 years it becomes very ingrained. However, there are more and more people nowadays you hear that are leaving very established career's and going and retraining in something entirely new.

This i think is even easier to accomplish now then ever before, and while there is a certain degree, of the older you get the harder to find a fresh start. This is not always true. It could just be that you are looking at the wrong area or down playing the skillset you have gained and built over your career. Of course there are some businesses that say you must have education, but there are just as many that are crying out to get people with good experience.

At the end of the day i think it is not so much about having change surprise you, as it is about being ready to embrace change and even going looking for it. I am 24 years old, and i read an article not that long ago that said people in my age bracket, will have an average of 7 different career's and up to 30 different employers. I have been working now for almost 8 years, i have worked in for 4 different industries (Retail, IT, Wholesale, and Cash in Transit), They are very different industries and really could be seen as 4 different career paths, and already i have had 6 different employers and operated my own business.

Of course i know that i am in a very fortunate position to be have been able to make these choices and to do different things, however it also comes down to being able to adapt to these different industries. and making choices to encourage change rather then try and do everything to avoid it. I don't really see the need to have a back-up plan, if you have a plan that encourages change, that really means you have no need for a backup plan.

This may be something of a dream for many people, but maybe it is worth working towards a plan of being in the financial position, that you can retire early if something happens to your industry. This is really only achievable if you ensure that you are going to avoid living up to your means, and living comfortably below what you have available.

KristineS
08-28-2008, 10:06 AM
You definitely have to be prepared to change and to learn new things. I'll be forty in February. So far I've worked in insurance, printing, television, real estate and what I do now. I've always done some form of marketing or writing, but there have also been aspects of each job that have been different.

I think the days of starting out at one place and working your way up the promotion ladder are over. You have to be willing to embrace change and you have to be aware that what seems secure today might not be so secure tomorrow.

orion_joel
08-29-2008, 02:41 AM
I think that is very true Kristine, and not even so much that you don't go to a career and work your way up the promotion ladder, but more that this whole process can happen a lot quicker.

While there is going to be a fair portion of people that will work in maybe not the same job but the same level of job for the majority of there career, with little progression or chance to advance. Then you have the people that really do want a career, who will go work in a low level job and over maybe 9 or 10 years go from that low level job right up the promotion ladder, only to decide that they want a change and will go and start the process again.

I think there are those people that seek a challenge, and they are the sort of people that accept change and does not matter what gets thrown at them they will bounce back. And there are those people that just let everything get them down and anything that may cause a problem can become a huge set back.

I think very much the same principle as the person that worked to make a million dollars and looses it, will very likely make another million compared, to the lottery winner who wins a million dollars and within a year is back to the exact same position they were in before they won, or maybe even worse off.

Aaron Hats
09-07-2008, 05:14 PM
I think I have a little different thought about backup plans than most...at least for small business owners. If you're starting a new business I don't think you should have a backup plan. That's like planning for failure. When you got married were you thinking about the steps you'd take if the marriage didn't work out? Sometimes, not having a backup plan or safety net makes you work harder and that's always a good thing when owning a small business.

orion_joel
09-09-2008, 05:06 AM
Aaron in some respects this is true, but then how many people go into a marriage with a pre-nuptial agreement, kind of like a backup plan i guess.

A back-up plan doesn't always have to be planning for failure, There are many forms of back-up plan, some not really so named. A succession plan is a form of back-up plan, same as how you may determine an exit plan for your business. So a backup plan is not always to cover something bad happening, but more so to give options, even when things are going well.

blogdog
09-15-2008, 10:08 PM
I think I have a little different thought about backup plans than most...at least for small business owners. If you're starting a new business I don't think you should have a backup plan. That's like planning for failure. When you got married were you thinking about the steps you'd take if the marriage didn't work out? Sometimes, not having a backup plan or safety net makes you work harder and that's always a good thing when owning a small business.

I agree. Backup plans are for whimps. Security is for postal employees. Dwelling on it creates fear which breeds bad business decisions.

If you're going to start a business, there's an inherent risk no matter what the industry or the business model. The worst that can happen is you go bankrupt. You won't die. Accept it and then don't worry about it. Make every decision from there on out based on the succesful vision you have in your mind's eye.

blogdog
09-16-2008, 12:59 PM
I'd like to add something to be clear. I'm not saying to throw caution to the wind or not to do your homework. What I'm saying is you have to commit 100% and then make it happen. If you focus too much on a backup plan then you'll be more likely to quit before your company becomes successful.

orion_joel
09-16-2008, 06:20 PM
Blogdog, I do absolutely agree that you need to be 100% committed to your business. Also that you should not put a big focus on developing a backup plan. However as i mentioned i think that there is good points to them and they do not always have to be done in a manner where you are quitting.

I guess what i am saying is a backup plan should be put in place as something that is flexible and allows you to know you do not have to stay on one set course. It really does not even have to be a written plan, but something you know you have the option of. For example if i was to go and setup for my business a retail shop that just sold ink and toner, this may or may not be sufficient to cover expenses. I know that if i was not meeting target's even though doing all i could, i would look to make some changes, i may add printers to my product range, this is a backup plan, but it is doing something to add to be business not quitting. It may be a very simple backup plan, adding something to the range but i believe a backup plan is about adapting your business to maximize it rather then quitting at the first sign of trouble.

If you backup plan is to close the business and get a job the first month you don't make your lease payment, then i do agree that it is a really bad plan.

KarenB
09-21-2008, 02:10 PM
I agree that having a back up plan for any business is a good thing within reason. As you mentioned, what is "now" today can become "yesterday" so quickly that it can make your head spin.

Looking at the recent events on Wall Street for example, it wouldn't matter if you were a technician, a trader, or just the guy down the block selling hotdogs. These shifts in economy affect us all, with an equal potential for success or failure, depending on what business one happens to be in.

A back up plan would be a good thing.