What's going on now in technology doesn't look to me like the dot-com bubble we saw in the late 1990s. That said, valuations are high, and it won't surprise me if they plunge at some point. The question is, how will you respond?

Right now, I'm dealing with the effects of another bubble burst of sorts--the fall in the price of oil. It's forced me to change the way I run the hotels I own in the oil-producing Bakken region of North Dakota. Luckily, I had secured a mortgage on the hotels before the price drop. That debt replaced all the equity I'd put in. I'd like to say I did it because I foresaw the disruption, but I didn't. I simply took advantage of low interest rates and the eagerness of banks to make loans.

After the price drop, the oil companies scaled back operations in the Bakken area, and the demand for hotel rooms plummeted. We responded as any company would--by cutting prices and marketing aggressively. We offered special deals to big companies and targeted workers in the field. We'd once been among the more expensive hotels, but became a low-cost provider. In other words, we adapted.

Recognize that market conditions can abruptly change. You need to have some idea how you'll respond. There are limits to how much you can do in advance. The key is to have options so you will be ready when it happens.


Startup wisdom from senior contributing editor and veteran entrepreneur Norm Brodsky. Please send queries to asknorm@inc.com.