Global Armageddon: how to prepare

Right. Basically, the world may or may not be doomed. We might well be on the brink of a second even deeper recession that would see the global economic ecosystem collapse and harbour what can only be described fairly as Armageddon.

Smarta went to a panel discussion at City University last night on the recession and its causes. We got this news in from the BBC's chief economics correspondent, The Guardian's economics editor, Channel 4 News's top economics correspondent, LSE's professor emeritus of banking and finance and other breathtakingly-titled economics geniuses.

Turns out even these clever bunnies didn't really have an inkling the crash was coming. As the Beeb's Hugh Pym shrugged: "We were all deluded."

You may well have read, as we have, that certain journalists did in fact know the crash was coming - even that they provoked runs on the bank with their scare-mongering. You may also have heard that bank insiders knew, which is why stock markets nose-dived (in reaction to internal rumours, so the story goes).

But then you may also have heard the journalists and economists murmuring there was about to be a crash in 2003 - one or two of Channel  4's Faisal Islam's respected colleagues. You may have read Tony Dye or Gillian Tett desperately trying to warn people of the crash in the intervening years, long before it actually happened.

Problem was, as Islam put it, 'it sounded a bit like crying wolf then'.

So the even bigger problem, actually, is that no one knows how to tell if there's about to be a colossal crash. No one. Not even these people, whose life it is to understand and interrogate the economy, whose careers depend on finding out what's really happening.

Trying to accurately forecast a crash on this scale is, as Tett has neatly put it before, 'like trying to predict an earthquake'. Sure, there are warning signs. But they come too late for you to be able to stop the world crashing in over your head.

Is this the most disconcerting insight you have ever received? The real possibility that a completely collapsed world, that could quite easily lead to human destruction on a scale never before experienced, might happen tomorrow - and no one could even give you a heads up?

Possibly. But is there any point worrying about it? Not really. What it does mean, for entrepreneurs and small business owners, is that there is absolutely no way you can accurately predict what is going to happen next and what might affect your business. There will always be a multitude of forces entirely out of your control that have the potential to unravel everything you've done.

But there is a way to safeguard yourself.

It is more crucial now than arguably ever before to have a contingency fund. And a big one at that.

You might think you should be ploughing everything into the business to keep things ticking over - but don't. Put aside a small amount a month. Always, always have some money tucked away somewhere that you absolutely do not touch, unless your business is absolutely at death's door.

If nothing else, then even in the good times this gives you a subconscious safety net that inadvertently encourages risk-taking.

But if the four horses of the apocalypse are about to trample on your front lawn, it also means that, unlike a good number of the world's most established companies, your business has an infinitely better shot at pulling through.

(Oh and by the by, here's our guide on how to save a contingency fund. We wouldn't leave you on that cliff-hanger without a helping hand!)