Chapter 69 Sixteen, death

Death is a natural law that has been faced and progressed since birth, but people do not want to be involved emotionally and try to avoid this topic, especially entrepreneurs, and they do not want to discuss the death of enterprises.Sober entrepreneurs should not shy away. Historically, there have been four ways businesses have died: The first type is social revolution and institutional change.For example, after the founding of New China in 1949, the state-owned enterprises and some national capitalist enterprises in 1947 and 1948 were bought or confiscated by the government after the socialist transformation in 1956 and became public ownership.So the social revolution will cause the nature of a large number of enterprises to change and die. This is the first type.

The second type is technological revolution.When a new technology enters a period of rapid development, some enterprises that the old technology can support no longer exist.The most typical is that when the car was on the rise, the company that made the horse-drawn carriage died; when we use mobile phones now, the pager company died; It was eliminated, and the enterprises that produced these products died.The ever-changing process of the technological revolution will lead to the death of many companies. These dead companies are often caused by the slowness or insensitivity of the parties (entrepreneurs), or paranoia towards previous technologies.In recent decades, the technological revolution has developed very fast, and the number of enterprises that die every day due to technological development is very large.Especially in the Internet age, for example, now that the search methods are very developed, the industry of manual retrieval of libraries will soon disappear; there is none left.The death of enterprises caused by technological change itself will be frequent and large-scale. Compared with the first kind of death, it is not very painful, but dies unconsciously in a peaceful state.

The third type is force majeure and unexpected disasters.The most typical ones are earthquakes, tsunamis, and wars. These disasters will cause many companies to go bankrupt and become insolvent.The more effective way to resist this kind of disaster is to buy insurance and take some precautions in advance to avoid death.The most typical is the story of Larry Silverstein, the operator of the World Trade Center before 9/11.The World Trade Center has 1.2 million square meters of office buildings, the property owner is the New Zealand Port Authority, and the lessee Larry Silverstein has 99 years of operation rights.He bought an anti-terrorism insurance three months before "9.11". After "9.11", he received compensation from the insurance company, so this force majeure did not make him collapse.If he has no insurance, then his business will undoubtedly collapse.

The fourth type is death caused by commercial competition.According to past research, every 5 to 7 years is a business cycle, and each cycle is caused by a crisis leading to depression, followed by recovery and prosperity; crisis and depression, recovery and prosperity, and so on.The most important reason for the crisis is due to the contradiction between supply and demand, resulting in the mandatory adjustment of the market supply and demand structure, as well as the mandatory renewal of technology and fixed assets.For example, a lot of milk cannot be sold, and the crisis has prompted companies to forcibly reduce the size of dairy farms or manufacture other dairy products, or the company will close.Each cycle of the business cycle more than half of all businesses cease to exist.

In the history of human commercial civilization, these four ways are enough to cause the death of enterprises, and each private enterprise has different methods of preventing, diagnosing and avoiding death. We have no way to resist social revolution, but now social revolution does not constitute an aspect that our private enterprises need to guard against. To cope with the technological revolution, enterprises must adapt to the future market and new products that are constantly emerging by maintaining a high degree of vigilance, sensitivity and innovative ability in technological competition.For example, Wang An's computers are all mainframes, but the market sees that small PCs are alive and the market is getting better and better, but he refuses to change, and his company dies as a result.If he is vigilant and sensitive, and can transform in time, he can avoid the death crisis brought about by the technological revolution.

To deal with natural disasters, it is necessary to do some prevention, but it is usually impossible to prevent.For example, terrorism insurance, few people in the world buy it, but Larry bought it. It is a certain accident, but generally speaking, some prevention can still be done.For example, when we do real estate, it is necessary to buy insurance against earthquakes. The only way to deal with business competition is to reduce debt, expand the flexibility of cash flow, and maintain the company's competitiveness and financial stability.Because of the economic crisis, the main manifestations are tight money, shrinking market, and reduced sales revenue.What this brings is actually a problem of cash flow. If you maintain enough cash, be able to flexibly respond to changes in market supply and demand, and reduce your debts, you can generally survive.At present, a phenomenon brought about by the technological revolution, information revolution and globalization is that there has not been a global and major economic crisis after World War II.Although some Southeast Asian economic crises have occurred, they do not fluctuate in the business cycle.Economists have been discussing: Do business cycle fluctuations still exist?The early classic cycle theory emphasized that information asymmetry leads to the intensification of the contradiction between supply and demand, and finally leads to mandatory crises and technological revolutions.Now there is a theory that information is already very symmetrical on a micro level. Since the development of information technology has gradually made information symmetrical, it is actually difficult for the contradiction between supply and demand to accumulate to a total outbreak, and it is now unlikely that there will be overall business cycle fluctuations.But even if we do not see a crisis, we still have to pay attention to the fact that the crisis brought about by market fluctuations and business competition still exists.The way and degree of manifestation may be different. It may not be a landslide or a landslide, but a partial one, such as the fluctuations and cycles of the home appliance industry and the real estate industry.To deal with business cycle fluctuations, it is best to change, this is the only way to survive.