So it’s corporate earnings season again, and the chatter from the business news outlets is that analysts are really starting to pay more attention to corporate earnings than they have in the past. Apparently they are only now remembering that how much a company earns is, um, KIND OF IMPORTANT IN DETERMINING ITS VALUATION! Some people are even becoming a little nervous about the fact that corporate earnings are not expected to be particularly robust, despite the fact that this has been true for nearly a year.
The reason they’ve been ignoring this situation for so long? The Federal Reserve’s seemingly endless quantitative easing, which it was recently suggested might end someday. This has really scared people, even though everyone theoretically knew it would end someday. The fear is that the stock market has raised itself up to an unsustainable level on the completely irrational presumption that QE would continue for the rest of time, and that any pullback by the federal government – which, once again, it has been repeatedly stated would definitely happen eventually – will bring the whole market crashing back down.
To be honest, I can barely follow what happens in the stock market, because I’ve never heard a single market analyst make a definitive point without at least three contingency predictions. However, I absolutely understand people refusing to pay attention to the long-term in favor of an unsustainable (yet currently positive) short-term. So, in honor of that, here are a few tricks to help you bring your company to the brink of ruin:
Ignore Business Fundamentals in Favor of a Passing Fad! Let’s say you make chocolate, but you hear that people are making a killing in bacon. The rational course would be to add bacon into your chocolate offerings (which sounds gross but some people love it!), or to expand into a new product line while maintaining your existing, proven revenue stream. But the more entertaining approach is to drop everything and jump headlong into whatever industry hits the top of your daily CNBC feed. Your business might have become successful by dedicating itself to whatever it is you’re currently doing, but that’s no reason to keep doing it. I mean, it is a reason to keep doing it, but it’s a boring reason.
Expect Temporary Market Conditions to Last Forever! This is the stock market’s current favorite, assuming that QE will last until slightly after the apocalypse. In your own case, I’m sure there are some temporary circumstances – an expiring tax credit, a seasonal rush, or a competitor’s bankruptcy – that are affecting your revenue. Now you could analyze those temporary conditions, make an educated guess as to their long-term effect, and then operate based on those estimates – but doing that will take way more time than it takes to assume that everything will always be exactly how it is right now. That’s how I’ve lived my whole life, by the way, which is why I still wear diapers.
Don’t Make Contingency Plans! They keep telling us to have six months’ expenses sitting in a savings account somewhere in case something goes wrong – but who among us has done that? And with your business, why would you even want to think about what you would do if your revenue took a 25% hit? That kind of thinking is depressing, and you’ll never sell anything if you’re sad all the time. Besides, that’ll make things so much more fun if something bad actually does happen; it’ll be so much more of a surprise that way, and people love surprises!
I hope that’s helpful. Now if you’ll excuse me, I’m going to go for a drive and stare intently at my steering wheel and maybe occasionally my dashboard. I’m pretty sure whatever I’m about to run into will get out of my way.