JSO,
A good businessman recognizes that there is very little he can control and therefore focuses on mitigation. In corporate speak this is called risk management.
In order to manage risk you have to recognize it. This is where contingency planning comes into play.
The typical entrepreneur has no plan for failure because it does not exist in his world. There are no problems according to him, only opportunities.
When the first problem shows up he sleeps right through it. Never even knew it happened. Eventually he does wake up and realize "I got a problem!". Phase two of this epiphany is designing a strategy to remediate said problem. It takes a while to come up with a strategy and then it takes a while to implement the strategy. The fourth time period is waiting to see if the strategy works.
A smart businessman has proactively defined what constitutes a yellow flag for his business. When he sees one he knows it for what it is and goes over to stand next to the red lever. As soon as he sees the second yellow flag he can predict a trend so he pulls hard on the red lever.
This red lever is not necessarily a panacea for his problem but it does provide the advantage of containing his problems in 1 1/2 phases rather than 4.
All the other contributors have done in this thread is help define what constitutes a yellow flag for contingency planning in the woodworking realm.