When the time comes, you need to know how to efficiently wind down your current business or projects, and gear up for the next cycle. You should also know where you are in the cycle, so you can plan accordingly.

No two businesses, projects or cycles are alike, but hopefully this will give you some ideas and things to consider.

There are phases to every cycle. Knowing where you are should help you manage where you are going:

The Calm Before the Storm – Nothing seems quite right and things are really quiet, but you don’t know why. This phase typically lasts about a year or so.

The Pivotal Moment / Crisis – Think collapse of Lehman, Merrill Lynch & Bear Stearns, or more recently if you’re in the oil industry, OPEC allowing the price of oil to collapse. Growth cycles don’t typically have pivotal moments or crisis, although they may ‘melt-up’ at the end.

Blue Skies Forever – Clients clamor for your services, opportunities abound, you’re staffing up and really really busy. When you’ve reached capacity and you’re referring work to others, this phase is nearing the end.

Just A Commodity – If the cycle is long enough, clients evolve into sophisticated, price-sensitive consumers of your services, and start bidding out your services. The number of competitors grows and other more cost-effective methods of getting things done emerge.

The Decline – The quantity and quality of new work gradually declines, and clients often become more reluctant to pay your bills. Clients are winding down their own staffs.

Then it’s ‘calm’ again, and the next cycle begins.

Strategies to consider as you approach each new cycle also apply to managing very large one-off projects:

Plan for the End at the Beginning – As soon as the new cycle or large project begins, start planning how to gear up and how to wind it down. For example, if you’re in the oil drilling business, you’re aggressively winding down right now – and you probably weren’t thinking you’d need to only a few short months ago.

Don’t Chase Your Overhead ­– Avoid costly overhead and financial commitments that go on well past the end of the expected business or project cycle. Many business owners have paid dearly for a personally guaranteed long-term lease that ran years beyond the end of the cycle. The goal is to have your overhead decline and end at roughly the same time as your revenue.

Keep Your Business Scalable – Scale your overhead (i.e. office space, staff, computers, etc.) in proportion to your revenue - both on the way up and on the way down. Build expansion and sublet options into leases. Align your staff with your business by letting them know if they have ‘jobs’ or ‘careers’ - if they know its a ‘job’ they’ll be looking for a new job about the same time you’d have to lay them off anyway; and, if possible, align your staff’s compensation with the way your business or project is compensated (i.e. if your clients pay you hourly, pay your staff hourly). When you need your staff to work hard, they’ll be right there shoulder to shoulder with you because they’re making money the same way you are. As your business or project revenue declines, so will your payroll.

Build Reserves – Save it when you’re making it, so you have funds set aside for the transition to the next cycle or big project.

Some lessons learned and things to consider:

Avoid Denial – Business cycles happen. Each cycle is a little different. As soon as your business is in growth mode again, market and pursue opportunities aggressively - most likely focusing on lenders if the economy is contracting; and on investors and developers when the economy is strong and growing.

When the Cycle Feels Like It is Over, It Probably Is – When it’s over, its over. Unwind your business or project infrastructure as efficiently and productively as possible. Structure your business or project overhead to wind down organically.

Avoid Bad Work When Things Slow Down – Bad work is usually worse than no work. Better to use the time and resources to get set for the next project.

Embrace Change – Change usually improves your business, even if it’s nearly always uncomfortable.

*David Wald is the president of Wald Realty Advisors, Inc.