I think what we're seeing is a combination of over-leveraging/under-capitalization in addition to the usual resistance to change that happens naturally.
All businesses get accustomed to paying certain costs and acting in certain ways (just like people do) and it takes a cold splash of water for anything to change. It's not necessarily that their businesses are fundamentally flawed. It can simply be that they've built up cruft - like the $5 daily coffee and $150/mo cable bill that many of my friends racked up during fat years. In many cases, getting back to basics would release a lot of the pressure.
But there's also the unique situation of over-leverage. Businesses haven't been conservative with their capital - rather, hoping that they could provide better returns for increased risk and sometimes even just spending money on projects without enough regard to the value of those projects. In fact, management has often been criticized for acting conservatively in recent years since it leads to lower returns (at least in the short-run).
Warren Buffet once wrote, "I've never believed in risking what my family and friends have and need in order to pursue what they don’t have and don’t need." Businesses should make money - they good and services they produce advance our standard of living. However, it's a little clear that they need to concentrate on their foundations a little more so that bad times become lost potential and not lost businesses.
All businesses get accustomed to paying certain costs and acting in certain ways (just like people do) and it takes a cold splash of water for anything to change. It's not necessarily that their businesses are fundamentally flawed. It can simply be that they've built up cruft - like the $5 daily coffee and $150/mo cable bill that many of my friends racked up during fat years. In many cases, getting back to basics would release a lot of the pressure.
But there's also the unique situation of over-leverage. Businesses haven't been conservative with their capital - rather, hoping that they could provide better returns for increased risk and sometimes even just spending money on projects without enough regard to the value of those projects. In fact, management has often been criticized for acting conservatively in recent years since it leads to lower returns (at least in the short-run).
Warren Buffet once wrote, "I've never believed in risking what my family and friends have and need in order to pursue what they don’t have and don’t need." Businesses should make money - they good and services they produce advance our standard of living. However, it's a little clear that they need to concentrate on their foundations a little more so that bad times become lost potential and not lost businesses.