Friday, March 27, 2009

The Business Lessons in this Bailout Mess

AIG execs took huge bonuses, some other company that got bailout money threw a big party or entertained customers or flew a jet or sent money goes on and on. The public is fed up and wants it stopped. Sounds simple: just have the government stop all that. The job of stopping all that becomes, well, a job. Energy is put into that. Those bailout companies now will add jobs for people to make sure that they are complying and won't get into more trouble. All that energy, time and investment will not be valuable in growing those companies or in making them profitable.

The business lesson - and I'm sure the bailout companies are thinking this - is don't get into that position in the first place.

Over the past several years, many companies were either doing wrong ethically or, more likely, were not running their businesses in a responsible manner. They were blindly acquiring, merging, expanding, and/or borrowing beyond reason as if the party would never end. The companies that were run correctly - quite often they were the fiscally conservative ones - looked less exciting or attractive.

But, during recessions, we start to value businesses that are run fiscally conservative and stable. As the saying goes, the worm has turned. A well run, healthy company is golden today. It looks quite beautiful.

A recession teaches us lessons in how to run a business. If we don't follow those lessons, our companies disappear or, if we're "lucky," someone else takes us over. (Which gives "luck" a bad name.)

Barry LaBov, CEO
LaBov and Beyond


  1. Thanks for sharing this nice post. The economy will always go through these faces. You need to prepare yourself the best you can to prosper in both good and bad times.

  2. Thanks, well said. It's not whether or not the economy will have ebbs and flows, it how you handle them when they come.