Re:A Long Time Until the Economic New Normal
by jasonv on Friday April 10, 2020 @11:27AM
(#22833987)
Tons of companies with "cash on hand" still responded to the current conditions by shedding employees immediately.
I'd argue that the poor government response to pandemic planning led those companies to conclude that whatever length of time this event was to last, there weren't strong signs that national management would mitigate that. They probably read those leaves correctly.
It's not just about the businesses.
(I say all this as someone who got laid off and has some savings but can't last as long as I would've 5 years ago...)
Re:A Long Time Until the Economic New Normal
by rietta on Friday April 10, 2020 @11:23AM
(#22833954)
I agree. For most small businesses, going the Dave Ramsey way is best. Be debt free, build a cash cushion, and as you say grow slow and methodically with cash not cash you think you might have next month.
Re:A Long Time Until the Economic New Normal
by samsonradu on Friday April 10, 2020 @11:47AM
(#22834216)
While it sounds doable in theory, it’s hardly doable in today‘s (well, yesterday’s) market conditions.
Low interest rates and an abundance of cheap money looking for yield distort the environment. Your debt-free, slow growth company will be wiped out by some bilion $ valued cash-burning startup.
esp if your primary cost is payroll... i ran a business and if we had to shut down even with super high savings rate of 20%, our payroll would have knocked that out in a couple months.
You can't prepare for specific black swans, but you can generally structure things to be more or less resilient. It's not even impossible for small businesses to gain during this time - my local wing spot is doing crazy good business because they've converted to to-go orders amazingly intelligently (curbside delivery, easy to get orders, high order accuracy, and delivery area is well managed by multiple employees).