Damage Control

Everybody makes mistakes.

Often when we plan, however, we just assume that we aren’t going to do anything stupid, ever. One of the number one entrepreneur-killers is an overabundance of optimism, failure to prepare for an ugly scenario, because the truth is, every organization has a serious misstep now and then. If we take time to do a case study on companies who make a wrong turn, it can go a long way toward helping us plan for our own moments of crisis.

This past year, there were a few high-profile companies that made a horrible mistake, betraying consumer expectations. Some of these mistakes were just plain stupid – Target, for example, sold apparel and accessories that explicitly sexualized children, even employing a devil-worshipper as a designer.

Needless to say, the backlash was not great for them. Target’s primary constituency is suburban mothers, and they were obviously put off by the store’s actions. Shares of Target fell from a high of around $180 early this year to under $110 presently. Their market cap fell $40 billion. Not all of this was due to Target’s controversial pride collection, but about $30 billion of it was – Target’s stock price was above $160 when news of the controversy first broke out. All of this redounds to a loss of 40% of the company’s entire value this year, and as much as 75% of that drop is attributable to this single crisis.

Target pulled some of the more offensive articles, and they moved some items away from the front of the store, but they didn’t really earn a lot of customer confidence back. As a result, it’s been a bad year for Target.

So that’s an extreme case, but two other companies made big mistakes in the public eye this year, with ample opportunity to respond and recover. One company was Bud Light, and the other was Liberty Safe. Both organizations made brand-destroying decisions, but they responded in very different ways…

A far-reaching new round of layoffs has hit corporate America hard this past week and in recent months. In the tech industry alone, there have been a quarter million positions eliminated in 2023. It isn’t just tech, however. Farmers Insurance has laid off 11% of its workforce, and Geico let 6% of its workforce go – a combined total of 4,400 jobs between just those two companies. Media has also been affected, with the Washington Post removing nearly 10% of its workforce, Barstool sports cutting 25% of its staff, and Buzzfeed has eliminated its news division entirely. Disney, NPR, McKinsey, and many other recognizable organizations have let large numbers of employees go this year as well, and when paired with a widespread inventory stock-up, some commentators have speculated that savvy corporations are getting ready for difficult economic times.

Your weekly chance to test your Bible knowledge! The answer to today’s question may surprise you:

Q: What is the longest book in the Bible?

Answer at the bottom

TIPS & TRICKS

How to Benefit from the Coming Recession

Don’t let the happy talk fool you.

The soft landing is, at this point, likely a myth. The pressure on the economy is unsustainable, and what goes up must come down. The inflation rate has slowed, but we still have to deal with the consequences of a year of currency debasement, weakening credit ratings, elevated production costs in some industries, unprecedented consumer debt – and all that loose money moving into the economy via consumer spending is about to dry up. The stock market slide may already be in its beginning stages, and by some accounts, housing is stagnating. If you put stock in Jeremy Grantham’s analysis, the commodities market may even be experiencing a bubble soon to burst.

And China could collapse, which would kick all of this into action rather quickly.

But this isn’t a doom and gloom piece. It’s a look on the bright side piece. A lot of people made their money during the Great Depression. Clever investors know how to capitalize on a down economy, but that requires looking at what’s ahead with sobriety, strategy, and a little bit of chutzpa.

“Buy low, sell high,” is the fundamental law of arbitrage, and nothing offers low prices like an economic setback. In order to make the most of a bad situation, you need to do three things with your business and/or investments…

• A recent study from the Texas Public Policy Foundation reveals the true cost of owning an electric vehicle to be the equivalent of paying $17/gallon.

• Mike Johnson, a staunch Louisiana conservative, has been elected as Speaker of the House.

• General Motors has reached a tentative agreement with the United Auto Workers.

• TGC’s Pastor Brandon Levering encourages churches to engage on difficult cultural issues.

• Homeschooling continues to experience explosive growth, even after public schools have long since returned to pre-COVID policies.