Thursday, 11 February 2010

Why the recession has been an entire red herring


All the recession has done is highlight the vulnerability of those businesses which would have gone bust anyway... This is the post that caused a stir over at BusinessZone

Here comes my tough love bit: businesses that go bust deserve to. Most of them run out of cash because their 'business model' (whatever one is!) is not sustainable. You don’t need a doctorate in business to figure that one out.

Yes, there was a change in circumstances. Yes, there was some bad luck. Yes, the toast landed butter-side down. But basically they ran out of cash. Here are the last four stories that were told to me. All very emotional and sad stories:
  • The demand for hotel rooms collapsed
  • The best customer went 'pop' taking you down
  • The bank decided it felt too vulnerable and wanted its money back
  • A bigger, better, cheaper competitor set up next door

The theme is consistently similar: "We didn't see it coming...", "no-one told us...", "we ran out of cash..."


There are no guarantees
All the recession has done is highlight the vulnerability of so many businesses. These were rocky businesses but their precarious position is disguised (or camouflaged) in a growing economy.


Healthy, unhealthy or simply not unwell
The opposite of a healthy person is an unhealthy person. But not being ill is not the same as being healthy. Loads of people are simply 'not unwell', just surviving. And so it is with businesses.


The opposite of a healthy business is an unhealthy business. But not being unhealthy is not the same as being healthy.


So how about your business? Is it:

a) Unwell?
b) Not unwell?
c) Positively healthy?

I suspect that there are many businesses out there that are simply "not unwell" – getting by and not being aware of just how tenuous the line between life and death is.

And, I'm sorry, but here comes some more tough love!


I am afraid that being "not unwell" is not good enough. You've heard the following before: There will be a shake-out in every industry. Only the fittest will survive. Too bloody right!


I am simply astounded at the sheer audacity of people who run average, mediocre, run-of-the-mill, me-too, look-alike businesses and seem to expect to make a living. They think they are owed a living because they work hard and are "in business".


Actually, the businesses that are doing well are simply doing the basics but they are doing them supremely well. And what do I mean by the basics?


Actually, I am not going to tell you.


If you don't know what the basics of running a business are then it is already too late. You are part of the "not unwell" and are about to join the living dead. The mere fact that you expect me to tell you what the basics are scares me to the core. How could you be in business and not know what the basics are? Ahhhh!


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