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People always write about coming recessions. I could "recession year 20NN" and find someone proclaiming a recession would happen that year. Given someone in the

People always write about coming recessions. I could "recession year 20NN" and find someone proclaiming a recession would happen that year. Given someone in the peanut gallery is always claiming recession is near imminent, when are businesses supposed to prepare? Leaving piles of purposeless cash is poor business acumen: it could be put into R&D, expanding operations, or returned to shareholders.

yellowapple 7y ago
> Leaving piles of purposeless cash is poor business acumen: it could be put into R&D, expanding operations, or returned to shareholders. Or put into making the company profitable, or at least not losing money. That might very well include R&D (to develop new products or more efficient ways to produce and distribute those products) or expanding operations (to leverage better economies of scale and have a better bargaining position with vendors).
darkwizard42 7y ago
I think what you can do is diversify and start thinking about business investments that would be good regardless of continued high growth or recession. So continuing to invest in improved infra might be a good area to put your cash/resources since that will pay off really well in high growth and probably still have savings in a slower period.
tedd4u 7y ago
Sure - different "math" for every stage of business on what to do with cash. But I think it's common (once in the revenue-generating phase) for companies to plan not to burn cash down beyond some contingency level. If the worst case scenario used in calculating that level of reserve cash is relatively mild compared to Pandemic'19 they could be headed for trouble.
fernandotakai 7y ago
>People always write about coming recessions. I could "recession year 20NN" and find someone proclaiming a recession would happen that year. i have an economist friend that says "economists have predicted 10 of the last 9 recessions"

yellowapple 7y ago

> Leaving piles of purposeless cash is poor business acumen: it could be put into R&D, expanding operations, or returned to shareholders. Or put into making the company profitable, or at least not losing money. That might very well include R&D (to develop new products or more efficient ways to produce and distribute those products) or expanding operations (to leverage better economies of scale and have a better bargaining position with vendors).

darkwizard42 7y ago

I think what you can do is diversify and start thinking about business investments that would be good regardless of continued high growth or recession. So continuing to invest in improved infra might be a good area to put your cash/resources since that will pay off really well in high growth and probably still have savings in a slower period.

tedd4u 7y ago

Sure - different "math" for every stage of business on what to do with cash. But I think it's common (once in the revenue-generating phase) for companies to plan not to burn cash down beyond some contingency level. If the worst case scenario used in calculating that level of reserve cash is relatively mild compared to Pandemic'19 they could be headed for trouble.

fernandotakai 7y ago

>People always write about coming recessions. I could "recession year 20NN" and find someone proclaiming a recession would happen that year. i have an economist friend that says "economists have predicted 10 of the last 9 recessions"