I would like to add one point regarding small business and understanding the economy. Find the what, when and the how to hedge your business against a downturn. I think it is necessary to understand what can effect your business in the grand scheme of things and mitigate a downturn with a hedge. Big cos do it all the time but I think it is not used as a small business strategy. If you're in the pizza business you better check out those cheese & pepperoni futures.:eek:
regarding this thread, if we were to follow the often quoted mantra of the so-called supply siders, then just give more tax breaks to small businesses, they're the engine of the economy isn't that what CNBC allows its loud mouthed commentators to keep touting?
Yes. We're not talking about politics here so I'll keep things on point and not cloud the discussion. Yes, your friend made a poor decision as the market showed him. McDonalds are franchises, so your comparison is foolish. How about using Sears as a better comparison.(I know they're not doing great, but they have other concerns because of their size) For the record Sears purchases their real estate outright and doesn't lease anything. Sears carries a diverse range of products, and more to the point, when they have products that aren't selling, they stop carrying them and bring in products that do. This is what your friend failed to do. I'm sorry but this is just asinine. Businesspeople that have long track records of success will tell you immediately not to assume anything. Your friend should have watched his sales trends more carefully(not earth shattering or terribly insightful, i know), carried diverse products that would be successful in his market. I know you're going to say something novice like "well, how was he supposed to know people would stop buying?" You want to assume something in business? Assume your current customers are going to go away at some point. Plan for that instead of assuming the business will take care of itself.
What do you define as âdefeatâ? If a company misses earnings 2 quarters in a row should they close its doors? You can talk about everything after the fact, but when you fall down and scrap your knee, your first instinct is to repair it, not amputate it. Believe me I have talked about this with my friend and I have told him flatly that his market is going after mostly lower class customers and itâs very simple, they donât have any money. This is not the 90âs anymore where everybody has a job and money to spend. The poor got shafted by rich corporations shipping their jobs overseas and small business is paying for it. He has changed his location in the mall to a bigger store and they have cut his rent in half. He is also trying to get different inventory. But the fact remains the same, his business was successful for several years and then it wasnât. He was plenty capitalized. You donât plan for a clothes stores sales to drop 70% in less than 2 years. Anyways, why all the bashing on small business? Why donât you bash the large multinationals that sold out this country? Everytime they do something stupid, they just hit the reset button and everybody else pays for it. Typical Republicans you people are.
Some months back I swore off saying anything negative in posts. It just struck me that I should not add to the insanity. I have been watching this post and occasionally putting in a fairly bland comment here and there. But enough is enough. It is 100% clear that krazykarl knows zero about the world of business. I am 61 and have been in businesses in five countries over the past 40 years. Some were fairly simplistic and others like owning (with a partner) three separate but affiliated investment banking firms in NYC, London and Lugano, Switzerland were quite complex. To say that on the day a retailer signs a 12 year lease he should be in a position to fund 12 years of lease payments even if he does not generate a single dollar in gross profit over those 144 months may be the single stupidest thing I have ever seen a human being put in writing. Karl ... you are one ignorant, giant asshole.
Because this thread is about small firms - so we're trying to stay on-topic. Why are you trying to Change(we can believe in!) the subject? Typical Democrat.
Clearly you are a sophisticated and professional businessman throwing around language like that. My apologies. First, no one is talking about a 12 year lease - it was 7. Correct yourself. Second, to imply that, how did you put it: that he should sign a lease without knowing if he can keep his end of the commitment? Why - the FUCK - would anyone sign a lease if they don't generate any revenue? Those that think like you are what's wrong, IMO, with the US business environment: you don't plan ahead enough and expect to just wing-it. Pray the sales are there to honor the commitments you made or hope someone bails you out. These are the types of people that default on business loans and generate loan losses for banks. I'll be the first to agree with the fact that banks do well for themselves, but you want to know why they need to? To cover loan losses from guys like this. I'll tell you one of the things I've learned in my brief time owning a business: those that feel the need to spout off about their breadth of experience have none. Perhaps you can share some of your wisdom with me: do you think it's necessary to take a loan from a bank to start a business?
do you think it's necessary to take a loan from a bank to start a business? ------------------- The gov't lets you deduct taxes on a business loan, the gov't is giving you their blessing to borrow money for business.
Karl ... I will answer this one reply from you and leave it at that. To go back and forth repeatedly with giant ignorant assholes is fruitless. I stand corrected -- the lease in question was 7 years or 84 monthly payments. I have never taken a bank loan to open one of my businesses but that does not mean it is not a reasonable piece to the puzzle that is start up financing for some ventures. Bank loans have their place in a capital structure. I have also never had the capital on hand to meet every commitment I made. I had confidence in my business model, I started on a modest scale and expanded along the way. There were certainly points early on that I could have been wrong enough to require coming back to the table with a landlord and buying my way out of a lease in force. Given that some form of limited liability entity always stands between the obligation and my net worth I am always confident that in a negotiation of that nature I walk in with equal weight to the landlord. When he signs a lease with a limited liability entity he is a big boy and knows that if things do not work out he will have to be happy with a token payment from a principal who has not encumbered himself with the obligation. I am fortunate ... I have not have had those negotiations but I have never doubted they were in my tool bag. So ... the lease in question was 84 months and you are still a giant ignorant asshole. Here is a list of a few businessmen who have made commitments based on expectations of future revenue rather than cash on hand: J. P. Morgan, Carnegie, Rockefeller, Krupp, the Rothschild family, every insurance company the world over ... need I go on? Take the wisdom you have been given and reread then rethink your remarks. Could anyone EVER start an insurance company if they thought they needed cash in hand to meet every potential liability? Insurance is an extreme example to be sure but your words call for having the money IN HAND before putting yourself into the liability. IT IS TRUE CRAZINESS. Feel free to rebut this as you see fit but I am done and finished with this conversation. You are an imbecile.