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Where were you when the first tech bubble burst? Are you prepared for the next one to pop?

By Pete Peranzo

A “bubble” in the economy occurs when there’s a space between what companies can be reasonably valued at and what people are willing to pay – a space that leaves their price far higher than it has any right to be. That space can’t last forever and when it collapses back down to reality it’s painful, causing a chain reaction that sends shivers through the economy and often decimates the smaller and medium sized businesses that are left in its wake, not to mention the workers.

Over the last year the rise not only in inflated stock prices, but also in over-extended private investment in tech companies has been dramatic, causing most analysts to agree that we’re sitting inside a bubble right now. Recent headlines about the extreme values of companies like Uber and Snapchat are enough to create some worries, but early news from 2016 showing dramatic layoffs across the tech industry is perhaps a signal that the inevitable downturn has already begun. Technology is far more deeply embedded in daily life and in the economy than it was in 2000 when the first tech bubble burst and kicked off a serious recession, which could either soften the blow as these companies are offering more real value or potentially make it all even worse.

Preparing for a tech bubble burst

Despite all this, there’s no need to panic or to feel overwhelmed. You don’t have to be devastated should a collapse occur. Almost more importantly, the effort to prepare isn’t wasted as it will still help to bolster your sustainability and to deepen your ability to stay ahead of any crisis that might hit the marketplace, whether it’s a tech bubble or something else.

How can you be ready? Here are some practical steps to take.

Spend less

It’s easy to run right to the edge, spending almost every penny that comes in the door. In a high-riding economy that can work, but in the event of any kind of hiccup you need to have some cash on hand to keep things running. Put money in where you need it to grow, then cut back on perks and extras until the tide is smoother. Spend as though the crisis is already here, so when and if it does come you’re already ahead.

Make strong connections

Build and maintain strong connections with your clients, strategic partners, colleagues, etc. so that you can weather the storm together. Isolationism is never a good practice in business anyway. Reach out in simple and substantial ways to build that emotional connection by engaging as much as possible and by offering support when you’re needed. Go the extra mile to create goodwill, because we’re all in this together.

Offer true value

What is it that you’re actually selling? How much is it really worth? Companies that burst during a bubble do so because what they’re offering isn’t worth it’s value. Take an unflinching look at your business and ensure that there is true value in the products and services that you’re putting out there, then make changes if you need to be of more value.

Stay on the cutting edge

Innovation is survival. Technology and business are moving so fast today and companies that are behind the curve don’t last. Now is not the time to sit back on your haunches – think forward and constantly be on the lookout for improvements and new ways to getting things done. Be concrete about this, writing down and communicating your plan to stay ahead.

While it’s important to be aware of what’s going on in the larger economy, what you don’t want to do is to knee jerk out of fear of a tech bubble collapse. Making big changes based on panic is always a bad idea. The key to success is to be proactive, taking steps to make your business better in substantive ways that will ensure your longevity no matter what the future might bring.

Pete Peranzo is the CEO of Imaginovation, a full service, turn-key digital solutions company serving Raleigh, NC and Charlotte, NC. He is a results driven individual with over fifteen years in the IT and software industry. Pete’s background in customer support is a driving factor in the company’s long term success and reputation. He has embedded customer service into the company’s core culture, and feels that fast turnaround, great communication and high quality support are keys to long term business relationships. Follow him on Twitter @PetePeranzo.