How could the epidemic destroy so many companies in one month?

Except for those who are more aggressive, a large number of small and micro enterprises are not unable to survive for a month, but are based on judgments about the foreseeable future. Small and micro businesses have had a very difficult time in the past two years, and the impact of the epidemic may last for more than three months.

Confidence is more important than gold, and hopelessness is more terrible than gold. It is better to give up temporarily than to endure.

In fact, even if the epidemic does not occur, a large number of small and micro businesses will close in 2020.

From the perspective of economic law, survival of the fittest is irresistible.

In addition, the ridiculous increase in labor costs brought about by Wanmin Entrepreneurship may also be an opportunity for adjustment this time.

When the epidemic first started, some companies started screaming, and the first one was Xibei. Catering industry. I originally expected to make a fortune during the Spring Festival, but as a result, all orders were cancelled, all employees went on vacation, and the boss started selling raw materials because there was too much inventory before...

A star hotel not far from my home , usually with four nostrils pointed upward and eyes clean, the minimum price for a meal is 1,500 yuan to reserve a table. If there is no service, he will not wait for you. Now he posted a message on the public account and said that he has started delivering food...

Facing bankruptcy There is also a gym. Every spring is the prime time for the gym. Those who have gained a lot of weight during the New Year have to go in to lose weight and wear spring clothes. Now, I can only ask weakly, are you okay?

There are also travel agencies. Needless to say, after the epidemic, I don’t know how many businesses will close their doors forever.

There are also hotels, scenic spots, etc., etc., all the industries that are mainly based on residence, are all chilling to the bones and painful to the heart and lungs.

Foreign countries are not immune. These days, I often think about the crowded scenic spots abroad, Australia, Japan, Thailand, South Korea, Europe... major airports, looking around, they are all Chinese, and I can only ask weakly: Are you okay? ?

Feeling sad. I feel really bad. I myself am one of the contributors to these industries, and it can be said that I am one of each.

Now that these contributors are staying at home and stocking up on food, can these industries avoid collapse?

As far as I know, even with normal daily operating revenue, some industries can barely make it. When you open your eyes, you will see a lot of famine. The money earned belongs to the landlord, the employees, and the customers. How many are left for you in the end? Now not only is it not making money, but the landlord and employees have to make less money. How can he not collapse?

To tell you something bad, I heard doctors from many big hospitals shouting that they will not be able to get paid next month, and they are losing hundreds of thousands every day!

God knows how awesome they are usually. There are huge crowds of people queuing up to give them money, and no one can bargain.

When the nest is overturned, don’t expect your egg to survive. In this society, in this world, everyone is closely related.

This is a good question and reflects the issues that everyone is most concerned about at the moment.

Based on feedback from companies in catering, wine, dairy, breeding, jewelry, medical, home furnishing and other industries. Judging from the reflected situation: if there is no business, 34% of the companies can only last for 1 month, 33.1% of the companies can last for 2 months, and 17.91% of the companies can last for 3 months.

The reason why such a serious situation occurs, I believe, should be due to the following reasons:

If you still don’t understand, Chen Xiaohua, the founder of Daojia Group, demonstrated it to everyone. A mathematical question that is relatively intuitive and tells you why some companies cannot survive for three months under the impact of the epidemic.

Record the real friends around you. The epidemic lasted for more than a month, which mainly caused some entrepreneurs to lose patience due to daily anxiety. Persevere until you really can’t persevere

After 2 years of entrepreneurship, there are still about 10 employees. The business mainly supplies products to Taiwanese companies. After the Spring Festival, Taiwanese who go back to celebrate the New Year are not allowed to come to Shanghai. The execution of the originally signed contract is far away. Intentional cooperation also involves many variables.

During the epidemic, even if you are determined to sell your house, you can no longer persist. And the bills and loans remain the same.

There is also a friend with 85 employees in an advertising company. Do offline execution.

Cost control is usually very good and cash flow is quite sufficient. But according to his feeling, there won’t be much business in the first half of the year. Offline activities have basically come to a standstill, and customers can only wait. Starting from February, only basic wages will be paid every month. But after all the calculations, the monthly expenditure is more than 300,000. The office buildings rented by advertising companies are relatively good and are also an expense. Even if work resumes later, the business impact will be huge.

One of their directors told me that maybe they have to find a way out on their own, in which case the company may not last long.

There is another person who has a business but no employees. Because of some contracts received a year ago, the employees were isolated after the holidays and were not allowed to come back. I work alone in the office day and night.

Only basic wages are paid. Maybe some later business will be lost due to untimely delivery, but the company can still survive.

Profits are estimated to be in danger.

In the circle of friends, there are all small business owners selling things. Some sell lemons. They purchased 20 meals a year ago, but now customers no longer want them. It needs to be dealt with at a low price, and there are also people selling daily necessities. The confidence of small and micro enterprises needs to be reshaped

For small and micro enterprises with a single profit channel, the risk of the epidemic may be huge.

The book "Total War" has a definition of war: "A war ends when one party loses the will to fight."

Cash flow, business, etc., have solutions for entrepreneurs To solve it, as long as the will is still there, you can run around the field, find resources everywhere, mobilize everyone on the team, and deal with those tedious little things.

Once the psychological energy of the founders declines, they will begin to have situations where they are more than willing but not strong enough. They want to exert force, but they just can't. They need time to reserve their own energy.

The epidemic is not over yet. I sincerely hope that enterprises, companies, and self-employed individuals who have contributed to GDP can survive. Ready for the next wave of development.

I believe that in China, most companies have debts. Although many companies have a bright appearance, it is hard for only you to know. Just because you have money in your account doesn't necessarily mean you actually have money.

Why did the epidemic destroy so many companies in one month? Because the impact of the epidemic on enterprises is multifaceted. For the normal operation of a business, a business residence is required, right?

When a company has business premises, it must pay corresponding rental fees, property fees and other expenses. These are unavoidable. These are rigid expenses and must be paid.

Although since the outbreak of the epidemic, Wang Jianlin, for example, has reduced or waived one month's rent for merchants in Wanda Plaza, which means a loss of three to four billion in income, it has actually won him a good reputation.

But how many Wang Jianlin are there in the country? In most entities across the country, good landlords will appropriately reduce rental and property fees, but I believe most landlords will not give you a penny.

I have a friend who owns a restaurant. It needs to be closed during the epidemic, and its own funds are stretched thin. I want the landlord to give me a discount, but the landlord said: I will give you a rent reduction, and I will eat. What?

During the epidemic, most bosses in the real economy were required to close their doors and thank customers. Not only did they have no source of income, they also had to bear high housing rental costs. There is a lot of pressure on labor salary expenses

If the company suspends operations, staff wages must be paid, and employees’ social security must also be paid. No one expected that when the epidemic hit, most companies closed down. Companies with reduced employees were fine, but for companies with more employees, it was a disaster.

The book funds are only enough to maintain the company's operations and personnel expenses. The company's source of income is cut off. After the company's working capital is exhausted, personnel expenses will be the last straw for the company. Epidemic outbreak node

The full outbreak of the epidemic occurred during the Spring Festival holiday, which was supposed to be a peak season for production and sales.

Most physical enterprises have prepared sufficient raw materials and accumulated most of their funds before the Spring Festival. We were preparing to work hard after the holidays, but when the epidemic hit, our inventories became a burden. We were unable to operate and produce. Products were unsalable. Other expenses had to be spent as usual. Companies were delayed in resuming work and were under great pressure.

Corporate Liabilities

As mentioned at the beginning, most companies themselves have certain liabilities, either to banks or to upstream and downstream companies. Originally, the survival of companies relied on bank loans and other debt transfers. out of the liquidity.

The epidemic has come and companies have stopped working. Although the source of income has been cut off, the debts that should be paid still have to be paid.

The cost of financial expenditures is high, and the suspension of production can easily cause the company's capital chain to break and lead to bankruptcy and liquidation.

The King of Karaoke nightclub in Beijing is a good example. Before construction even started, it was already facing the dilemma of layoffs and bankruptcy liquidation.

Overall, the outbreak of the epidemic has indeed caught most companies by surprise. Enterprises are delayed in starting operations, operating costs remain high, and capital chains are broken. Excellent enterprises are struggling to support themselves, not to mention the many small and micro enterprises that are in a difficult entrepreneurial period. But on the other hand, this is also a touchstone for enterprises. If you persist, the future may be smooth, but if you fail to persist, you may collapse.

For the company, if there is no income for a month, but the rent still has to be paid, labor costs have to be paid, and the loan has to be repaid, the cash flow will definitely be tight. For a large enterprise, it's not bad. For small businesses, it can be a big difficulty.

A university conducted a survey on the cash flow of small and medium-sized enterprises. 34% of small and medium-sized enterprises cannot sustain their cash flow for a month. 85% of companies cannot survive three months.

For large enterprises, they can get loans if they have collateral and credit guarantee

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But for small businesses, getting a loan is very difficult. It is more likely to rely on the boss to borrow money or use some private loans with higher interest rates.

Xiaomi and Meituan can easily apply for hundreds of millions of special loans allocated by the state, while those small and medium-sized enterprises can only sigh for money.

If small and medium-sized business owners cannot borrow money or obtain loans, it may be difficult for them to survive this winter.

In addition, the country's interest rate cuts will not affect them. Although the interest rate has been reduced, they cannot get the loan at all. There is no point in lowering interest rates. Moreover, interest rate cuts and reserve requirement ratio cuts may also cause labor costs to rise and rents to rise. The pressure on these small and medium-sized enterprises to survive is even greater.

I hope the country can introduce more measures to effectively help small and medium-sized enterprises.

Small and medium-sized enterprises are the mainstay of employment. If too many small and medium-sized enterprises cannot survive, there will be problems with employment and economic growth.

I hope the epidemic will end soon and everyone will start making money.

There is a term in finance: "Cash is king." The most important thing for a company is not its profit, but its cash flow. If you look at profits alone, JD.com was a bad company in the past few years. Because it has been losing money, but when you look at JD.com’s cash flow, you will know its value. Why did the epidemic destroy many companies in just one month? These companies were forced to cut wages, reduce efficiency, or even directly file for bankruptcy. All this is due to the company's lack of cash inflow and the break in the capital chain (why Evergrande offers a 25% discount promotion is to collect cash flow. Of course, Evergrande is not actually nervous to this extent and has certain routines).

Let’s take Evergrande Group as an example: As of June 2019, Evergrande Group’s consolidated statements had total assets of 1,762.9 billion yuan, total liabilities of 1,400.8 billion yuan, and net assets of 362.1 billion yuan. In other words, if the brand value and other factors are not considered, if Evergrande is cashed out now, Evergrande will still have 362.1 billion yuan, which has nothing to do with bankruptcy. But Evergrande’s 362.1 billion yuan is not all cash. It may be invested in projects under construction, fixed assets, and advertising. There may be only 100 billion yuan in cash in the company’s bank account.

Assume that Evergrande Group’s monthly fixed expenses are 80 billion yuan (loan interest, wages, water and electricity, advertising, property, office costs, etc.). In the past, the company has been operating, and every month With funds withdrawn, assuming that an average of more than 100 billion yuan can be withdrawn every month, then for Evergrande, a fixed expenditure of 80 billion is not a problem at all.

But now due to the epidemic, all marketing centers have been closed, and its hotel business has also been affected. The monthly capital withdrawal may have become 10 billion yuan, and there is still a difference of 70 billion yuan from the fixed expenditure of 80 billion yuan. The first You can still use the funds in the original bank account to support you in the second month, but the funds in the account will not be enough in the second month. At this time, you will not have the money to repay the bank or the supplier. Once you overdue the payment, you will be exposed. After that, all the banks and suppliers are worried that there will be no funds for recycling, so they will rush in and ask you to repay the money. As a result, you will definitely not be able to come up with so much money at once (this was the case with LeTV back then), because the borrowed Money is invested in real estate in various places, but if the house has not been sold yet and there is no money to withdraw from the house, it will eventually be bankrupted.

Therefore, looking only at net assets and profits, a company may be in good shape, but there is no operating cash inflow or the operating cash inflow is not enough to cover the company’s monthly fixed expenses, and the balance If it is larger, it is easy for the capital chain to break. This is why it is very taboo in finance for a company to expand wildly, especially blind debt expansion. If everything goes smoothly, it is indeed possible to achieve great strides in development, but once it encounters Difficulty, if operating cash inflow decreases in a short period of time, the company may disappear. So it is not unreasonable to say that cash is king. Summary

In reality, many companies are indeed very profitable and their operations are also very good, but they do not keep too much money on their books. The profits from previous years have been distributed or reinvested. If according to normal With business development, the company's monthly payment collection and the original amount left in the account are enough to cope with everything. However, an epidemic suddenly caused the company to lose its source of income, and the bank's loans, employees' wages, and the company's rent were all , it may not always be extended, so when the money cannot be paid on the repayment date, no matter how good the original performance of the company is, it will have to face the dilemma of bankruptcy. This is why some companies cannot survive for one month.

The industries I am currently engaged in in the freight forwarding industry include foreign trade companies/customs brokers/trailer companies/bag factories/furniture factories, furniture stores, etc...

Also look for them I have talked with some suppliers and said that the financial operations are a bit tight, but they can still get through it...

It is not like what the questioner said, so many companies have gone bankrupt...

However,

There are indeed bankruptcies in life, maybe I haven’t encountered them. As for the company that closed down after a month of unemployment after the epidemic, I think the company was just established and has never encountered such a crisis. , the risk came unprepared/the capital operation could not keep up, it should be due to the lack of ability to control risks. Many companies appear to be running normally on the surface, but in fact they are all closely linked, with accounts coming in and accounts paid out at the same time, and the capital chain follows too closely. So when the epidemic came, it was impossible to prevent it, which led to the collapse of the company that was founded in the past few years!

Because it is no longer possible in 2019. It is too easy for everyone to get loans and the competition is too fierce. So everyone is maintaining it. After a year, there will be nothing left. Now I have not received one month’s pure payment, and I can’t turn around. I can only collapse. I have a public building, and the previous tenant also did not do well and quit. I continue to open a store. I am an employee. This time my house is plagued by the plague, I can stay at home. I can't go with my colleagues. I open the door even if there are not many people. Workers' wages, rent, and when others close their doors, they have to grab some customers, but all this money is licking their own blood. Who wants to take risks? But there is no way.

I was originally full of energy and wanted to show off my talents in 2020

But around the fifteenth day of the first lunar month, I panicked and started selling children’s clothing. Just trousers are enough. We can’t wear nice clothes at all. Many people don’t go to work and have no income. We have no way to sell goods.

The logistics is impeded and spring money can’t reach us. Even if we can open for business, we have no goods to sell and no way to purchase goods.

What should I do if everything is a dead end for the time being? On the last day of February, I told two salesmen that there was a good opportunity to work first and at least make some money. We don’t need to be paid if we don’t work here, but I still feel that The rent and salary are so heavy that I can’t breathe

On March 1st, I repeatedly considered that children’s clothing stores would not be open. The epidemic will not really be over until May, June, July, and August. It is the off-season every year. The market will only improve after September.

Really, as a small boss, I feel that everything ended too suddenly, let alone the employees.

The only ones I feel I owe are the two clerks who lost their jobs during this epidemic. I also have 50,000 to 60,000 yuan left in inventory waiting to be digested, which is not what I want