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The Moral of this 'Saab' Story Is…


Swedish car-maker, Saab, is perilously close to driving itself off a financial cliff this week. After halting manufacturing in April because it couldn't pay its vendors, the company admitted yesterday that it can't pay its employees, either.

While two Chinese auto-makers have offered to rescue Saab, until the deal is done, the car-maker is on its own. How could a company with such a high-quality brand reputation end up with such an elementary cash-flow problem? It offers three big lessons for business owners.

Love thy vendor – No matter what you sell, your business surely depends on other vendors who supply you with your goods and services. Do not be tempted to treat these folks as an unnecessary evil. They are your lifeblood and, in some ways, even more important than your customers. After all, you can always find more customers. On the other hand, it may be very hard to replace a vendor that specializes in what you do. Saab is now in the position of having to ask it's vendors to accept only 10 percent payment and wait for the balance until September. The fate of the company is literally in the hands of its suppliers. Should you find yourself in a similar predicament someday, you will be glad you treated your vendors kindly.

Keep an emergency fund – Suddenly, Saab can no longer pay its employees . Did someone lose the password to their online bank account? How could they have waited until the last minute to make this announcement? Perhaps, if they'd planned more carefully, they could have negotiated with employees to accept lower salaries while the company got back on its feet. Now, they've cut their employees off cold and it's hard to imagine many will stick around. Keeping a close eye on your finances and being realistic about what you can afford and what you can't is essential. There shouldn't be any surprises when it comes to accounting .

Brand isn't everything – You might be the best in your business, but that doesn't mean a thing. No matter how well respected your brand is, a company without a solid financial foundation is doomed. Think of your business like an old-fashioned scale with the finances on one side and the marketing and branding on the other. If these two don't balance out, you're headed for trouble. And then, you too, will be telling your "Saab" story.

Jeanette Mulvey

Jeanette has been writing about business for more than 20 years. She has written about every kind of entrepreneur from hardware store owners to fashion designers. Previously she was a manager of internal communications for Home Depot. Her journalism career began in local newspapers. She has a degree in American Studies from Rutgers University. Follow her on Twitter @jeanettebnd.