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Many construction companies suffer from what I call the arrogance of profitability. When times are good, the company owner buys new tools and trucks, and the latest in office equipment, and may also invest in speculative projects. When the economy slows down, however, these companies are left with no resources. Many have no choice but to declare bankruptcy. Wiser builders are more conservative, maintaining liquid cash reserves equal to six months of overhead expenses. They continually monitor their finances to protect their company, their family, and their employees. The difference between builders who survive a downturn and those who don't lies partly in the way each uses the two main types of financial