Things are not always rosy for any industry and they all have to go through some rough patches at different phases. You try to pull out the details of an industry for the last two decades and which is doing phenomenally well now. You will be astonished to see that it has gone through several bad phases in those 2 decades and this reveals many things. First is not every industry generates profits at all times and when it experiences the bad phase, it has the potential to wipe off many companies that are associated with it. The second is the most important point and it talks about how to overcome the bad phase systematically. Now focusing on the construction segment, it is also considered to be an industry that has generated profits in huge figures and the profit numbers have been drawing more people linking up with this industry.
As we say people come and go but the one who manage to stay can become a successful business owner. As a matter of fact, staying in this industry is a bit difficult as people have mended their ways after making some money and mostly losing everything they had. So what ideally important is to stay afloat during turbulent times and you can do that only if you have managed to set up contingency fund for your business.
Normally, we set up such contingency fund to take care of any emergency in our personal lives. Knowing that the future is unknown, these funds are said to be maintained at all times irrespective how eager you are to buy a luxury for yourself. Contingency funds are never meant to fulfill your luxurious needs and people need to understand this before it gets too late for them. In the same context, contingency funds are quite important when it comes to tackling an emergency.
Keep increasing your contingency fund:-
At the beginning of the construction business, you must have allocated a certain amount towards the contingency fund. But as you move ahead in life and simultaneously in your business you need to ensure that you keep increasing the amount and save more in your kitty. While you grow your business, the risk factor also increases manifolds and therefore it becomes a must to keep increasing the money in your emergency kitty.
Do not use contingency fund to meet business requirements:-
Contingency funds are not meant to meet your business requirements like buying heavy equipment or paying wages to your employees. It is there to take care of difficult times only. You have to make sure that you avail sufficient amount to meet other expenses. However, when the business is not doing well and you are cash crunched and need to pay the bank loan perhaps that is the moment when you should take out money from the kitty. You can consider the situation where you do not have work in hand and you got to pay your dues to different institutions as an emergency one and can make use of your kitty to meet those needs.