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No matter how big or how small a company may be, there are a few lessons everyone can learn from the recession.
- Even the big boys get it wrong - Financial experts tell regular investors not to try and time the markets. Yet that's just what many of the banks and financial companies did. Everyone suspected a real estate collapse was coming, but everyone tried to ride the wave as long as they could. They wiped out instead.
- Getting government bailouts is not a strategy - Sure, the government has pumped a lot of money into propping up ailing companies. But that money comes with strings attached (even if they add them on after you've already signed)--and a stigma. And don't count on the government to honor any deals you think you made (AIG bonuses). When the public finds out they'll deny everything and lead the mob against you. It may just be better to solve your own problems.
- When in doubt, buy a congressman - One thing that can't be denied as we sift through the ashes trying to determine the causes of the recession: all the lobbying and campaign contributions didn't help--unless you were the one doing the lobbying and contributing. When things get tough, a few well-placed contributions can pay off big time in earmarks, or in a key regulator looking the other way at a convenient time.
- Don't look to the government as an example - If you want solid advice on how to run a responsible business watch "The Apprentice", not Washington D.C. They're more than happy to give you advice, solicited or otherwise, but they have no intention of following it themselves. Economics work differently in Washington, or at least they believe so. In spite of their example, don't take on more debt to get yourself out of debt. Don't trim your budget by adding more expenses. And don't approve major expenditures without even reading them.
- Plan for hard times - Economic slowdowns and recessions will happen on a more or less regular cycle. Plan for growth in the good times, but make sure you have a solid fallback position and plan for the hard times. Manage your debt carefully and don't assume credit will always be available. If anyone tells you the good times will just keep on going indefinitely start planning for the crash--and don't buy anything from that person.
There's no doubt the current recession resulted from a myriad of reasons, and there's plenty of blame to go around. There are also many lessons to be learned--not all of them good. The important thing, however, is to make sure we learn and learn well. If there's anything we can count on, it's that downturns will come again. Be ready.
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