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Stress Test: Will Your Company Last Five More Years?

Written by Gary North on November 25, 2011

Back when I worked for a salary — in 1979 — I thought my employer was on solid ground. But I still made the break. I had worked for over four years to start a newsletter business. It was finally making a lot of money. So, I quit my day job. I became self-employed.

I still write my monthly newsletter, Remnant Review. I publish it on my site, www.GaryNorth.com. But the company I worked for in 1979 has been out of business for 20 years.

If I had not developed my own side business, I would not be rich today.

But in either case, I am not retired. I never planned to retire. That is because I did not trust pension fund managers or the dollar manager: the Federal Reserve System.

In a fascinating article, Steve Denning discusses the half-life of Fortune 500 companies. What is half life? It’s the time it takes for a radioactive substance to lose half of its energy. In business, it’s the decay of productivity by 50%. In 1960, the half-life of Fortune 500 companies had been 75 years. Today, it’s 15 years.

Along the pathway down, people get fired. Think of the 200,000 people who lost their jobs on Wall Street in 2011. They thought they were set for life. Anyway, they did in 2007. They weren’t. Lehman Brothers died over a weekend. Others are shrinking fast. The losers get swallowed up. Think: Merrill Lynch. Think: Wachovia. Think: Bear Stearns. Then the firings begin.

What about your employer? Why do you think the firm will survive intact? Why do you think it will still pay you your monthly salary in five years? Are you crucial? Would you still be crucial if the company gets hit in the next recession. (There will be another recession.)

Read Denning’s article. It offers insights on what to look for. There are early warning signals that tell you that it’s time to shop for a new employer.

Continue Reading on www.forbes.com

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3 thoughts on “Stress Test: Will Your Company Last Five More Years?

  1. JustAmerican says:

    Just think Americans were proud of this country in 2007. Before the fall of America into the present ministration (yep, spelled right),

    American could plan for retirement. Now if someone has worked hard and not saved some instead of blowing every dollar, the Obamanites are wanting the rest of us to pay for their retirement.

    The lose on Wall Street is due to the bailouts in Washington. If the recession had been handled on a common sense approach by some competent people, America would be rolling today.

  2. Alice Maxwell says:

    We have painted ourselves into a corner and now must get out. The trouble is no one wants to mess with the job done so we sit, hoping the paint will dry and when we step out, all will be the same as it was. But it won't be since the house has been looted while we sat concentrating on the paint job.

    What fools we have all been but whom amongst us will be the first to admit it!

    That's why we have wars. When we are all in th corner, someone starts a fight and we all come out to referee or join and then the carnage is on . When its over, it is so awful no one has a chance to point fingers. Everyone has to hustle a life back again and so we go on to another world we have to make.

    Isn't that the definition of adventure? Innovation? The American Way?

    We have all been this way before so let's get on with it!

  3. NO, in fact closing at the end of year, tried to hang on for another year, not enough business to remain open & pay over head, salary, taxes, insurance, buy supplies, customers not buying to stock their shelves with hopes of selling. So what is left will donate to charity & cut my losses. 1979-2011 died because of inflation & recession.