Vinu: Manu, business conditions can change suddenly. How do entrepreneurs prepare financially for slowdowns?

Manu: By doing cash flow stress testing. It means checking whether your business can survive if sales drop or collections slow down.

Vinu: Sounds important. How does it work?

Manu: You create “what-if” situations.

Manu: Sure.

Manu: Exactly. Stress testing tells you how strong your cash position really is.

Vinu: What areas should I stress test?

Manu: Three major areas—

sales decline, delayed customer payments, and unexpected cost increases.

Manu: Then your cash inflow gets disrupted.

Even profitable businesses can struggle to pay salaries or suppliers during that period.

Manu: At least enough to cover 3–6 months of fixed expenses.

If monthly fixed costs are ₹10 lakh, keeping ₹30–60 lakh buffer improves stability.

Vinu: What’s the biggest mistake entrepreneurs make during good times?

Manu: Assuming current sales will continue forever and expanding too aggressively.

Vinu: How often should stress testing be done?

Manu: At least every quarter, especially if your industry is volatile.

Vinu: Final takeaway?

Manu: Strong businesses are not the ones that grow fastest—

They are the ones financially prepared to survive difficult periods without panic.

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