Going through the training for Profit First, I ran across a comment that you just can’t judge the financial stability of a company from their outside appearances. One thing we’ve seen with Covid is that no matter how big or old the company, a lack of cash reserves can end them. Hertz, a 101 year old company has declared bankruptcy citing a 73% drop in shares over the past three months. I find it a bit depressing that even a company the size of Hertz can’t ride out an economic downturn. My wild unfounded guess is that it has to do with short-term thinking and you get the results you measure so pumping up the stock price, keeping the shareholders happy, and paying the CEO over $9M is more important than ensuring long term success of the company.

My karate instructor used to say that you can learn something from everyone even it it’s what NOT to do.

What did we learn from Hertz? Make sure that you’ve structured your business to last out a storm. Covid is a rare event but economic downturns are not. Fortunately adopting a Profit First model can inure your business from suffering this same fate. As luck would have it, I can help you with this. Hiding from the numbers and hoping the problem will go away didn’t work for Hertz and it won’t work for you either. Don’t try to go it alone when help is just a phone call away.

https://www.cnn.com/2020/05/22/business/hertz-bankruptcy/index.html

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