A slew of tax hikes and spending cuts are still scheduled to go into effect January 1. With no 'fiscal cliff' deal in sight, you'll need a plan.
The thought of planning to go over a cliff may seem incomprehensible, but in a situation where you know it might happen--like you are now--you should put a plan in place.
While Washington has shown signs of inching toward a deal that would avoid the so-called fiscal cliff, that could easily fall apart. Especially considering House Speaker John A. Boehner (R-Ohio) unexpectedly canceled a vote on his own proposal yesterday.
So what do you do as a small business owner to prepare? Think of it the way you do costs versus revenue. It's obviously easier to control your expenditure than it is to spur revenue growth. A similar issue exists with the fiscal cliff. You can't control it, so focus on what you can control.
Here are three ways to manage in times of such great uncertainty:
1. Plan for multiple scenarios.
You need to know what you will do any way things play out. Keep in mind: the fiscal cliff may not affect every business, and it certainly won't affect every business the same way. Ask yourself what the fallout will be for your business. If the United States goes over the cliff, will you need to cut costs or reduce staff? Do you have extra cash on hand you can put to work if Washington politicians reach a reasonable deal?
2. Make a list of early warning signs.
What do you need to see to give you an idea of where the country is heading? As you know, when it comes to Washington, what sometimes looks like progress is actually just window dressing. But do your best to read the tea leaves, and then hedge the way you run your business in that direction.
3. Give yourself options as long as you can.
In the face of uncertainty, the longer you can make short-term bets, as opposed to significant long-term investments, the better.
In business, you can't afford to think short-term for too long, but this is one situation when it pays off to be careful about getting out over your skis. Certainly you haven't seen enough guidance, yet, to be confident. Maybe it's coming. Either way, you should have a parachute ready if the country goes over, and a good set of brakes in case it stops right at the edge.
MICHAEL ALTER is president of SurePayroll, America’s leading online payroll service. He received an MBA from the Harvard Business School and holds a bachelor's degree in economics from Northwestern University. @michaelalter