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The speed of things
posted by Emma on 31 Dec 2008
There is one feature of the too-numerous-to-remember businesses falling into administration which I keep noticing. All the businesses were doing more or less OK until recently, but a combination of poor Xmas sales and a retraction of credit lines means that their demise is astonishingly rapid. It only takes one bad season - one poor Xmas quarter's trading, one really bad batch of returns, one pulled overdraft - and that's it. Bullet to the head. You can't stockpile enough cash to see you all the way through a bad year, so really there's no security. This is the feeling I've always had with Snowbooks: we've done fine but every time we have a good season / title I think 'yes, but that's in the past' - it's next week's sales which matter, not last week's. Maybe there's something to be said for being paranoid like this - we're always in survival mode, not just in times of recession, so there's no complacency. I suspect more and more businesses are starting to think like me, now.
Comments: 4
This feels a bit zen too - that we can never really be secure, however much money we put away/how much knowledge we swallow/how many relationships we cling on to - it can all be gone just like that. This could either lead to clinging even harder, or, as you say Em, doing the best we can right now and, hopefully, enjoying the moment. Here's to right now (and that gorgeous George Mann book cover).
Posted by: fiona robyn | December 31, 2008 12:03 PM
Andy Grove of Intel was a big proponent of this philosophy! It's a wise one!
Eoin
http://www.intel.com/pressroom/kits/bios/grove/paranoid.htm
Posted by: Eoin Purcell | December 31, 2008 12:19 PM
Is it the nature of our current economic model that businesses are unable to protect themselves from a bad trading period? Are margins squeezed so tightly that even established companies must depend on credit to get them by?
Posted by: RobC | December 31, 2008 12:34 PM
"it's next week's sales which matter, not last week's"
Well, yes--but remember that those sales rest on all sorts of other things, like strong (or not) financing, accurate accounting, reasonable return policies, good acquisition strategies and all a manner of other things.
While some companies' sales are going to be a lot better than others, business plans play a great part too. And I bet yours beats many into the ground with a heavy wooden stick. If you get my drift.
This is a difficult time for businesses which depend only on their monthly incomes to survive. But for those with solid foundations and thoughtful strategies, it's a blip which will be overcome.
Posted by: Jane Smith | January 3, 2009 08:43 PM