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A business that doesn't have cash flow for bad times is not a business. There was a time when business weren't leveraged to the max and the profit taking during

by lalos 7y ago

A business that doesn't have cash flow for bad times is not a business. There was a time when business weren't leveraged to the max and the profit taking during good times was not squeezed to every cent. This could easily be fixed with regulation to promote this behavior but currently the priority is to take the profits to the owners.

generalpass 7y ago
> A business that doesn't have cash flow for bad times is not a business. There was a time when business weren't leveraged to the max and the profit taking during good times was not squeezed to every cent. This could easily be fixed with regulation to promote this behavior but currently the priority is to take the profits to the owners. This may be what we read about publicly traded firms, but small businesses are in a completely different category. For example, many of them, if they do not take loans to improve their offering, will lose customers to the competition.
notyourday 7y ago
So Nike is not a business? Cheesecake Factory is not a business? TJMAXX is not a business?
- throwaway_USD 7y ago
  No they are just debtors...once they can't service their debt they are simply insolvent debtors whose assets will be foreclosed on.
  - rdtwo 7y ago
    Those assets are worth pennies on the dollar to a 3rd party and the liquidation process will cut those pennies in half
jvm_ 7y ago
Your local diner probably doesn't have months worth of cash sitting around. They make food, sell it, pay employees and open the doors the next day. That falls apart pretty quickly if people stop buying their food.
- internalthief 7y ago
  One of my favorite bagel shops is barely making payroll during this shutdown, and only because they are heavily innovating how they keep customers. They are now offering meal kits, so you get a meal for two to four people in one easy go, they started shipping via USPS, and they are doing local deliveries. They make their own in-house butter, cheese and cream cheese so their kits do fairly well. They are also increasing what other items they are selling, such as adding bread to their lineup. Which is absolutely fantastic. But it's still hard for them, with the reduction in people coming in and sitting around they don't get people buying a bunch of coffee or having breakfast and then lunch while chatting. They have had to furlough some of their staff, and I really hope they make it through, because another favorite restaurant of mine is going under, they simply can't afford to keep going, even with a loan that would help pay salaries, there are other contracts and payables due that simply can't be covered with enough loans... loans against what collateral?
  - xeromal 7y ago
    One of my favorite bread shops is basically in tears on instagram due to this thing. They've tried a few approaches to improve sales but they're basically closing shop for now.
- remmargorp64 7y ago
  So lay off the employees, have them collect unemployment. What are your operating costs? Really just the lease on the building. So don't pay the lease for a couple months. Who suffers? The commercial real estate holder. What are they going to do? Lease it to another restaurant while your doors are closed? So the commercial real estate investor loses out on some profit and/or defaults on their commercial mortgage payment to the bank. Now who is suffering? The bank! But what happens when the big banks don't get their real estate loans paid? They can always just put loan payments on hold for a couple of months, and instead of making $300 billion in profits that year, they make only a measly $100 billion. When it all blows over, the small/medium businesses can re-open and re-hire all of the people back again, and they can all stop taking unemployment. Life continues on as usual. Why should the average person have to suffer so that these big banks can keep charging interest on their loans every month? Why can't we just legally mandate that they have to put the loans on pause and suck it up like the rest of us?
Anon1096 7y ago
>There was a time when business weren't leveraged to the max and the profit taking during good times was not squeezed to every cent Can you cite such a time when businesses, especially small, could survive in a competitive market without taking on debt and redirecting profits to the business? Because this hasn't been true ever. Small businesses need every edge they can get to survive, and that means not having gold-laden chests lying around waiting the the 100-yearly plague to come.
- lalos 7y ago
  Accounting 101: balance sheets, cash flow analysis. Those tools were not created to have interesting graphs and tables to look at but to promote and show explicitly what’s going on behind the scenes. I get that a lot of people just invest on their emotions (like-able CEO; must invest!) but what’s actually happening is they are just taking in debt and passing on the risk (while profiting temporarily and leaving the company exposed naked). I have tons of friends with small business that own 2-3 personal property, all the luxuries and yet officially the business is in shambles (right now). The attitude is “who cares”, they take the money out and spend it on themselves and just fire everyone. They pass on the risk. That money came from greener days and now employees have to file for unemployment. I guess people see this as normal, but it isn’t and it shouldn’t. Tax-payers are now subsiding those unemployment checks while the profit taking already benefited the owners.
gamblor956 7y ago
This does not describe most businesses, ever, especially not most small businesses. Small businesses have always lived relatively hand-to-mouth existences, and the "profits" are usually enough to cover the owner's equivalent of a salary.
tathougies 7y ago
There is a huge difference between 'bad times' and having your business eliminated by government mandate. Even during the recession of 2008, demand didn't go to zero. It is insane to expect anyone, business, individual, or otherwise, to be able to go completely without income for any prolonged period of time.

by lalos 7y ago

generalpass 7y ago

> A business that doesn't have cash flow for bad times is not a business. There was a time when business weren't leveraged to the max and the profit taking during good times was not squeezed to every cent. This could easily be fixed with regulation to promote this behavior but currently the priority is to take the profits to the owners. This may be what we read about publicly traded firms, but small businesses are in a completely different category. For example, many of them, if they do not take loans to improve their offering, will lose customers to the competition.

notyourday 7y ago

So Nike is not a business? Cheesecake Factory is not a business? TJMAXX is not a business?

throwaway_USD 7y ago
No they are just debtors...once they can't service their debt they are simply insolvent debtors whose assets will be foreclosed on.
- rdtwo 7y ago
  Those assets are worth pennies on the dollar to a 3rd party and the liquidation process will cut those pennies in half

jvm_ 7y ago

Your local diner probably doesn't have months worth of cash sitting around. They make food, sell it, pay employees and open the doors the next day. That falls apart pretty quickly if people stop buying their food.

internalthief 7y ago
One of my favorite bagel shops is barely making payroll during this shutdown, and only because they are heavily innovating how they keep customers. They are now offering meal kits, so you get a meal for two to four people in one easy go, they started shipping via USPS, and they are doing local deliveries. They make their own in-house butter, cheese and cream cheese so their kits do fairly well. They are also increasing what other items they are selling, such as adding bread to their lineup. Which is absolutely fantastic. But it's still hard for them, with the reduction in people coming in and sitting around they don't get people buying a bunch of coffee or having breakfast and then lunch while chatting. They have had to furlough some of their staff, and I really hope they make it through, because another favorite restaurant of mine is going under, they simply can't afford to keep going, even with a loan that would help pay salaries, there are other contracts and payables due that simply can't be covered with enough loans... loans against what collateral?
- xeromal 7y ago
  One of my favorite bread shops is basically in tears on instagram due to this thing. They've tried a few approaches to improve sales but they're basically closing shop for now.
remmargorp64 7y ago
So lay off the employees, have them collect unemployment. What are your operating costs? Really just the lease on the building. So don't pay the lease for a couple months. Who suffers? The commercial real estate holder. What are they going to do? Lease it to another restaurant while your doors are closed? So the commercial real estate investor loses out on some profit and/or defaults on their commercial mortgage payment to the bank. Now who is suffering? The bank! But what happens when the big banks don't get their real estate loans paid? They can always just put loan payments on hold for a couple of months, and instead of making $300 billion in profits that year, they make only a measly $100 billion. When it all blows over, the small/medium businesses can re-open and re-hire all of the people back again, and they can all stop taking unemployment. Life continues on as usual. Why should the average person have to suffer so that these big banks can keep charging interest on their loans every month? Why can't we just legally mandate that they have to put the loans on pause and suck it up like the rest of us?

Anon1096 7y ago

>There was a time when business weren't leveraged to the max and the profit taking during good times was not squeezed to every cent Can you cite such a time when businesses, especially small, could survive in a competitive market without taking on debt and redirecting profits to the business? Because this hasn't been true ever. Small businesses need every edge they can get to survive, and that means not having gold-laden chests lying around waiting the the 100-yearly plague to come.

lalos 7y ago
Accounting 101: balance sheets, cash flow analysis. Those tools were not created to have interesting graphs and tables to look at but to promote and show explicitly what’s going on behind the scenes. I get that a lot of people just invest on their emotions (like-able CEO; must invest!) but what’s actually happening is they are just taking in debt and passing on the risk (while profiting temporarily and leaving the company exposed naked). I have tons of friends with small business that own 2-3 personal property, all the luxuries and yet officially the business is in shambles (right now). The attitude is “who cares”, they take the money out and spend it on themselves and just fire everyone. They pass on the risk. That money came from greener days and now employees have to file for unemployment. I guess people see this as normal, but it isn’t and it shouldn’t. Tax-payers are now subsiding those unemployment checks while the profit taking already benefited the owners.

gamblor956 7y ago

This does not describe most businesses, ever, especially not most small businesses. Small businesses have always lived relatively hand-to-mouth existences, and the "profits" are usually enough to cover the owner's equivalent of a salary.

tathougies 7y ago

There is a huge difference between 'bad times' and having your business eliminated by government mandate. Even during the recession of 2008, demand didn't go to zero. It is insane to expect anyone, business, individual, or otherwise, to be able to go completely without income for any prolonged period of time.