For those of you
who have fought the business battles for more than a few years...welcome to
Herman University. Each month we will
have a host of articles with one specifically geared to your needs. There will be commentary about all issues
facing those running mature companies and for executives who have survived in
good economic times and now wonder who turned the power switch off.
Let's start with
MONEY, and particularly credit and credit lines. My personal philosophy is that we abandoned
Capitalism a long time ago and while trying to run companies under a Capitalist
system...we switched years ago to CREDITALISM and the rules of Capitalism no
longer apply.
With 100 banks
already failing and 200 more to fall in the next twelve months you are
teetering on the brink, like it or not.
Healthy companies who have never missed a credit line payment suddenly
find their credit lines reduced or cut off.
Did you plan for that? Not a
chance.
The problem you must face at
this time in our economy is that your healthy business will suffer because
there is a liquidity crisis in the banking system. So many bad loans are on the books that
reserve requirements make it impossible for many banks to keep lending money.
Further
complicating things is the fact that consumers credit lines have been cut to
the bone. They have no more "plastic
power" in their wallets and those who do are guarding it and not using it. The dollar is getting hammered and
unemployment is growing.
Reality is upon
us. There is no money in the banking
system to access so growth will either be funded internally or growth will kill
many companies that were formally healthy with access to credit.
MONEY is the
blood in the arteries of business and we are in serious short supply of it.
So, what does
the head professor at Herman University think you should do? Sell, buy or stand there in the middle of the
road and let the bus hit you in the ass.
This recession is not a "blip" on the radar screen...it is here to stay
for quite some time. That's right...this
is going to be the "normal" way of doing business for quite some time. And because that is reality you need to
truthfully look at your cash and cash availability to run your company and make
some hard decisions.
If you think
customers are right around the corner and the coffers will be flowing again and
the banks will be sending out new credit cards to everyone, then you my friend,
are an ostrich...and while their head is buried in the sand they get run over by
the bus and die. If you have short
credit lines and long cash needs you better think about selling your
business.
We will discuss selling in
next month's article.
Now suppose you
were one of the fortunate business owners who experienced steady cash flow, did
business with a bank that isn't going to falter, and happens to be selling
something the world buys even when tightening their belts. First of all, aren't you lucky...or very
smart. Assuming you are both...why not buy
that suffering competitor or use this economy to expand your business into new
areas that will help you build an even stronger future for your
organization.
Future articles will
discuss how to buy others at a discount.
Doing nothing
right now is the equivalent of being a "Deer-in-the-Headlights" and they always
get hit in the ass...and die.
Drop me a note
and give me the topics you want to see more about. After all, this University wants two way
communication...and by the way...would you be a great interview to be featured here
in the future?
