A full-page ad in Forbes grabbed my attention the other day. A picture of a private plane (Cirrus SR22) flying on a bright day with a gorgeous landscape below. What caught my attention though was the deployed parachute helping the plane land safely, rather than crashing in a fireball.
Should a pilot experience a problem, they can deploy this chute, which will provide the pilot a wonderful story of how they survived a plane crash rather than instant death.
Turns out this chute is sold on almost every new SR22 (why not) yet has saved a total of just 4 lives. Turns out, the odds of a small plane crash are fairly small but the market demographics that buys these planes feels this few thousand bucks extra is a good investment.
Not because the odds are high it will save their life, but because having the chute gives the pilot (and all those who care about them) a great sense of peace and confidence.
As I reflected on this ad, I realized I spend a lot of money on parachutes in my life, some expensive, some not very expensive. I have a lot of life insurance and spend several thousand dollars on premiums each year. A great parachute for my family, but it grants me peace of mind and I do not worry that my sometimes aggressive driving will result in my daughters not going to the college of their choice or cause my wife to move from our home.
I have a battery backup on my alarm clock, leave 10 minutes early for appointments, pay my bills electronically and a few days before required. Why? I do not want to be distracted with worry or thoughts about ‘what if’. I want to have the parachute even if I never use it. I’ve come to realize it makes my life better just having one (or several).
The other day my daughter and I enjoyed sushi at a nice street side place in down town Pasadena. We found a parking spot right in front of our table so I skipped the two quarters needed for the meter. No need, I was only about 20 yards away.
I noticed, however, as I listened to my daughter discuss the important parts of a 6th graders life that I was distracted by the thought a ticket landing on my windshield while I was listening to my daughter and enjoying our meal. A $0.50 parachute would have bought me peace and allowed my focused attention on the drama of 6th grade. Bad choice, good 50-cent parachutes are rare.
This past month I helped two clients get working capital for their business when they had other options that offered less expensive financing for them. They both told me they wanted to establish a track record with a financing company that would be there for them when times were not as good as they are today.
Recognizing a banks’ money is less expensive, they also knew a bank would not be in a position to provide a business loan if times ever got difficult. If you are in business long enough, you’ll go through difficult times. You will have opportunities for expansion that require quickness, or need more growth capital than a bank will provide.
These two are preparing for those times now, when business is good. As one told me, “the few dollars I save in financing costs will not make or break my business. Having access to working capital in the future may. That seems like a good investment to me”.
Sometimes a parachute can save your business life; sometimes it just provides peace of mind and additional confidence. Sounds like a wise “parachute investment” for any business owner who plans to be around for a long time.
