Changing Business Models: From Enduring Entities to Cash Cows
The traditional accounting model views a business as an independent entity presumed to outlive its founders and future owners. Presently, far too many small businesses and corporations embrace a get-rich-quick outlook that employs policies designed to accumulate massive short-term profits, sell huge quantities of inferior products or services, and inflate stock values to reward stockholders and company heads. The danger in this model is being realized as more and more quality businesses are driven out of the marketplace by bad competition while the long-term needs of the nation-states and their People are neglected.
The 2008/2009 Global Recession demonstrates how a trend to embrace unhealthy business models where companies exist primarily to help executive officers and investors amass unwarranted profits without regard to the even greater costs to the broader economy is detrimental. Not only did the collapse of the financial markets destroy lending institutes, which have long histories, after only a few short years of irresponsible risk taking, it cost all consumers many times more than what the beneficiaries of these policies received. Currently, "profit first; bailout second" policies, coupled with "spent now; maybe pay later" attitudes by consumers, fuel bloated bubbles that undermine economies and nations with instability.
On the consumer and small business front, these attitudes have created an environment where wealth is consumed and ultimately destroyed without regard to the future. Businesses built solely for the benefit of the immediate generation leave the next generation with fewer opportunities to improve their economic standing. Ultimately, this makes it difficult for all businesses to compete without gorging on unnecessary debt and stripping down wages to undercut the competition while providing inferior services and products at higher costs to consumers.
When it comes to wealth, the legacy passed from one generation to the next helps determine the opportunities future generations have. Facing a legacy consisting mostly of debt and irresponsible economic practices, the emerging generation must work harder with fewer opportunities and resources available, because the previous generations abused their chance to grow financially. Selfish, wasteful spending has created higher risk for creditors while it also means fewer resources exist, resulting in a negative legacy that must be addressed. America, as a bold example, currently has a frightful legacy that will severely hinder the success of emerging generations.
The economy is built on the small businesses and corporations that provide financial opportunities for individuals, which include jobs, bring economic resources to communities, and spur the development of communities. When businesses are managed to solely address short-term concerns instead of building communities, they destroy them. Those who are allowed to profit at the greater expense of others drain communities of their resources while providing small crumbs of wealth in good times before abandoning them at will to leave them in need. Overall, this process can eventually destroy a nation even as mighty as the United States of America.
Today, far too many businesses have turned into little more than cash cows for their beneficiaries, who gorge on profits acquired through short-sighted practices, before these lifelines to myriads of communities are left to die. Meanwhile, this view makes it more difficult for businesses, which are responsible members of their communities, to compete and survive. Long ago, businesses used to be seen as enduring entities that were managed to last for generations to come. This positive legacy allowed the United States, as well as other nations, to prosper while returning their owners a healthy profit without costing others so dearly.