how is it that in times of crisis major businesses will go bankrupt within months? Do they have no savings or what?
In: Economics
Something else to think about too is your own paycheck. You have money saved (if you’re responsible) but we’re living in extraordinary circumstances. How long could you survive off your savings and how much could you cut costs?
No one can objectively say how long things will be shut down at the moment or how long it will take customers to return even when things are safe. It could be several more months and a lot of responsible individuals can’t even last several months without some sort of income.
Disclaimer- I don’t think you need to panic, we’ll be ok but keep taking precautions and doing your best.
Major businesses spend a lot of money on private dinners and corporate events to coddle the top dog at the firm. Once a crisis hits, unless you fire the employees, executives still need to party. And partyin aint free.
Jumping on the general bandwagon with.. a lot of people think that because someone or a company makes a lot of money that they’re loaded.
That’s usually not true. A company may make a million a month, but they might also be spending a million a month, which flattens out to zero.
Or they make a million a month, but then spend 12 million or 24 million on something.. which requires 12/24 months of steady income at a million.
I make widgets and sell them.
Another company buys my widget but they have 3 months to pay me.
They go bust and do not pay me. I have now no money for the widgets I made and I have to pay for the materials and wages.
I go bust and don’t pay the company that sold me the materials.
Much of business works on credit.
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