The recent growth in the U.S. economy has not trickled all the way down into our local economies. Although companies are still reporting record profits, some are resorting to layoffs, bankruptcies and restructurings. Recently JC Penney laid off workers sending them out into the cold, empty job market to search for their employer. The saving grace for these employees is that they have the chance to look for work while also collecting paychecks for a short period in the future. Other companies are resorting to giving their staff longer notices before they have their reduction in force (RIF).
Everyone knows that the economy and therefore the job market is still in trouble so they are trying to be more sympathetic to the needs of their workforce. If there is one thing that a bad economy creates, it would be a loyal workforce. Employees work hard and stay put because they know that they don’t have many employment options. Unfortunately for the workers, if the business operations or their business plans are flawed, that same loyalty cannot be expected. So what can you do to protect your finances if you suspect that your company is in trouble? Better still how do you know if the company you work for is in trouble? Look for these warning signs:
1. If your management team has started to have an unusual amount of meetings off campus, you may be in for an upcoming change.
2. If your company norms begin to change, such as no snacks in meetings, decreases in travel, or your copy machine starts to run out of toner and paper, your company may be experiencing cash-flow or credit problems.
3. If your company begins to outsource using an overseas workforce, your position may be in danger of being replaced.
4. If you start hearing rumors of buyouts, mergers, or company shutdowns on Fridays, your company may be looking for ways to take care of its finances in drastic ways.
5. If your executive management team has recently changed, your company will soon be facing major changes. All nonessential positions will most likely be in danger of being replaced.
If you notice any of the previous reasons happening at your company, you should start playing “financial defense.” Financial defense is preparing your household’s finances for the chance that you may be experiencing a financial change event in the near future. Sports fans like to say that offense wins games, but defense wins championships. For you to succeed financially, you will need to play a little bit of defense.
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