Whether it’s Coronavirus or an economic downturn, are you living on the edge of a financial disaster with your business, and can you survive? Because that’s what it will be if the news in today’s Business Insider is correct –
An Ivy League professor who nailed the financial disaster of 2008 says another ‘colossal disaster’ is on the way — and warns of a 50% market crash
- Dave Collum, professor of organic chemistry at Cornell University, was able to sidestep the financial crisis after he noticed a calamity brewing in subprime mortgages as early as 2002.
- Today, he sees vast corporate excesses, massive debt loads, and extremely exuberant valuations as cause for concern.
- Collum warns of a 50% stock crash that would bring valuations back to historical averages.
What will it take to cushion yourself from financial disaster? As little debt as possible. For every dollar of debt you commit your business to, it takes a minimum three dollars of income to erase. A dollar for every dollar of value of the item you’re selling, a dollar for every dollar of time and a dollar of profit for every dollar of the sale.
If you have a pile of debt on your business, how would you survive a 50% downturn in the economy? You’d have to reduce your expenses. Do you know what they are? Do you track them on a monthly basis?
If you aren’t using a budget page now and would like a simple business budget page, fill out the form below and I’ll send you one. Figure out what profit you have, how to reduce your debt (if you have any) and choose to survive any downturn that might occur. It won’t surprise me that a market downturn happens, it’s just a matter of when and how big.
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