Friday, November 7, 2008

I Want A Bailout Too

Where Do I Get My Bailout?
  1. Slowing sales

  2. Cash burn

  3. Growing liabilities

  4. Difficulty getting customers financing

  5. Negative impact on business from declining consumer confidence

  6. Growing inventory due to slowing sales

  7. Negative impact on employees and suppliers if business continues to deteriorate

  8. Poor business decisions, failure to recognize and adapt to changing markets, bloated infrastructure, high level of employee entitlements, etc.

  9. Liquidity issues

Other than #8, is this a description of my business, your business, the business next door? I think at this point it is a description of the majority of businesses. Who deserves a government bailout? Who is to big to fail? Whose failure would create to large a ripple effect on the rest of the economy?

Who is the arbiter of all of this? If I have a business that exhibits the attributes of #8, do I deserve to be given the largess of the taxpayer?

The Big Three

Unfortunately for you and I, we are not to big to fail and no one in government is realistically going to come to our rescue. The auto companies, hat in hand, will no doubt be given some type of a rescue package.

Auto manufacturing is a very difficult and highly competitive business, particularly since we can not really compete with the foreign manufacturers that build their cars in the States, with the quickly changing technology, consumer confidence at multi-year lows, demand for alternative fuels, on price and the financing crisis that leaves eager buyers unable to buy the cars.

What we, the people need to make sure of (particularly since they will be using our money to do it), is that this money given to the auto makers in whatever form it is, comes with an incredible amount of strings attached that will force them to make the tough choices and the serious structural changes required so that we will hopefully not have to do this again.

Just like you and I have got to do without a government bailout, auto companies need to get lean, get mean and make good business decisions. Is that to much to ask?

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