Boeing proves you should always have a Plan B.

Getting an opportunity to take on a contract from a large reputable company can be a big win for any small or medium sized business. It’s not unusual for an entrepreneur to make a quick decision to do work for a larger business and naively believe that everything will work out and that there should be no problems. Without intentionally making bad decisions, an entrepreneur can find themselves in a bind when their customer, a larger reputable company, decides to not pay them and makes it difficult for them to finish their work or contract. This often results in an entrepreneur taking a loss and sometimes having to close up shop.

Running a business means taking opportunity wherever you can find it. When you have no reason to believe or anticipate problems you have no reason to plan for the worst case scenarios. Inevitably every business will get stuck with a customer that doesn’t pay or be blindsided by events that they were not able to directly control. I believe many entrepreneurs exercise blind faith when working with larger companies and until they get burnt, will bend over backwards in hopes getting paid even if that means taking on more work and digger themselves a deeper hole. In my opinion, every customer should be treated the same. Whether a customer is large or small your business should have safeguards in place to ensure you get paid and have limits on what you are prepared to do before walking away from an opportunity.

Production of the Boeing 737 Max has been halted indefinitely. As Boeing made the announcement its stock price dropped as did its credit rating. In short, Boeing made an airplane, the 737 Max, that had some fundamental problems with its design and decided that software was the best way to correct for the design challenges. It turns out that the software didn’t work properly and hundreds of people lost their lives from airplane crashes. Boeing thought they could patch the software and get back to business so they continued to manufacture the airplane and built up inventory, only to announce that they are not sure when or if the 737 Max will ever fly again. Aside from the details associated with the grounding of the 737 Max indefinitely, there are numerous small vendors that produce components for Boeing that will now find themselves in trouble. Boeing appears to not have provided any guidance to vendors who now have to fend for themselves as their business volume drops. There is risk in any business and vendors supplying Boeing will have to adjust their businesses based on this announcement.

The opportunities your business decides to pursue should involve some level of scrutiny to ensure that all risks and downsides are made known. Even if they seem implausible, a conversation around “what-if” can help your business save a lot of headache and financial stress should something not work out the way it was intended to. Whether your business serves large or small customers should not change how prudent you are in managing risk.

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