If demand for your business suddenly drops 30%, 50%, 80% overnight, what do you do?
Cut costs by a commensurate amount to stay solvent.
This is very sad and tough to do but the answer is clear.
— debt service (highly levered businesses)
— fixed payrolls (union contracts; govt workers; tenured staff)
— big leases (real estate, planes, capital equipment)
Expect those entities to need bailouts.
— debt overhang
— overly large payrolls
— big office leases
— expensive biz dev deals
— slowness to react
— unwillingness to cut sacred cows
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