Posted on April 12, 2008 by Robert Ringer
I’ve often referred to the airlines as “hiccup businesses.” Meaning that if an airline has a cash-flow dip (read, “hiccup”) for one or two months, it’s in serious trouble. And if it’s a big hiccup and drags on for three or four months, the airline may find itself in bankruptcy.
What makes a company qualify as a hiccup business is a flawed business model. It’s a model that requires selling a product or service to the masses at artificially low prices in order to maintain unrealistically high sales and razor-thin profit margins. Businesses based on such a flawed model are living on borrowed time. In the case of an airline, a 10 percent drop in passengers spells doomsday.
All it takes is a 9/11, Hurricane Katrina, or nose-diving economy to bring a hiccup business to its knees. Which is why I continue to believe that it’s only a matter of time until most, if not all, airlines become nationalized. If you hate air travel now, think how much you’re going to love flying on government-owned airlines — the same outfit that runs the United States Post Office!
Adopting a hiccup business model is a recipe for disaster. I’m referring to businesses that depend on an unrealistically high number of customers for success, that sell to people who can’t really afford to buy, and that cannot withstand bad economic times. Modern Las Vegas, catering to millions of people who can ill afford to lose their paychecks, is another classic example of a hiccup business.
When Jimmy Carter got lost on his way to the bathroom in 1976 and ended up stumbling into the White House, it was a virtual guarantee that the economy would get progressively worse. Americans felt a sense of hopelessness as a result of no one’s being at the controls in the Oval Office.
This, I believe, was reflected in the explosive sales of my first three books during the Carter sitcom years. People were clearly looking for answers that they knew they couldn’t get from the government. I offered some of those answers, which translated into book sales. I have always believed that Jimmy Carter was the best thing that ever happened to me when it came to marketing my first three books.
The reason I bring this up is because, with the U.S. economy irreversibly doomed due political realities, you would be wise to search for business opportunities that can do as well, if not better, during bad economic times.
For example, I believe that when the government’s economic policies yield their inevitable consequences, companies such as Office Depot and Lowe’s will do extremely well. But businesses like these require lots of money, lots of employees, and lots of inventory, so I would suggest that you leave them to the big boys.
But you and I don’t need to invest millions in buildings, equipment, and inventory to make money. We are the luckiest people in history, because we are the first to live in the age of the Internet. Which gives us the opportunity to make bundles of money with little or no investment, few or no employees, and no inventory or production costs.
In the coming economic holocaust, those who can sell quality information to people desperately looking for answers will do extremely well. And they’ll do it without having to deal with inventory or receivables. The Internet is not only a business that brings instant results, it’s a cash business.
As the government continues to carry out its economy-killing schemes, it’s sure to create incredible financial opportunities those who understand what’s happening and take action accordingly.
Remember, hiccup businesses are just outwardly visible signs of the underlying problem — the fact that Western countries have gravitated toward hiccup economies. The idea is to spread the wealth through artificially high wages, extend irresponsibly high lines of credit to anyone with a regular paycheck, then extract as much of the money earned and borrowed to fuel a false economy.
Unfortunately, in the U.S. and other Western countries, it is politically impossible to say no to fiscal irresponsibility. Any politician who has the courage to say no to “entitlements” is volunteering for a new title — ex-politician. Which is why an economic holocaust is only a matter of time.
Stay alert, and keep your head while all about you are losing theirs. And, above all, stay away from hiccup businesses, because a whole lot of hiccups are on the horizon. Think information … think no inventory … think no receivables … think Internet … and keep your eyes open for the incredible financial opportunities that the government’s economy-killing policies are sure to present.
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