michael feuer

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OMG — panic in the streets!

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OMG, texting generation’s abbreviation for “Oh, my God,” aptly describes the near cataclysmic financial market gyrations during the infamous last weeks of September 2008. Businesses must never forget the survival lessons that these events teach.

During those tumultuous days, Lehman Brothers, the venerable white-shoed investment banking firm, folded after 158 years. Lehman’s fall followed on the heels of the Bear Stearns demise that rocked the investment world several months earlier. Little did we know that we had not seen anything yet. Next came the collapse of Fannie Mae and Freddie Mac, along with the rescue of AIG, the world’s largest insurance company. Just when we thought the worst was over, Washington Mutual was seized almost in the dead of night and sold, making this the largest bank failure in history. Next came the Fed’s shotgun arranged marriage, with Citigroup agreeing to buy the failing Wachovia Bank only to be usurped by Wells Fargo that triggered a shootout between the two rival bidders, which was ultimately won by Wells Fargo.

If most people hadn’t been so scared or lost so much money, this wild ride would have been intellectually fascinating.

OK, what is, is. However, have we finally learned our lesson? Only time will tell. For common variety executives or owners with no hope of a government bailout if they mess up, they’d better take note if they want to continue to play in this risky game of business.

There are numerous lessons to learn from the last eight to 10 years of excess and reckless behavior that almost shattered the foundation of our system. So what were the biggies to remember and etch into the minds and hearts of your teams?

If it is too good to be true, don’t believe it; it will never last.

Unprecedented growth, with little or no regard for common sense, combined with loaning money to someone who might be light on the old-fashioned requirements, such as a job and at least a credit history that provides a 50-50 chance for repayment, is a recipe for disaster. Call me a dreamer, but collateralizing a loan with something that has some value near the amount being borrowed makes good sense, too. The harsh truth here is a sobering case of financial reality — as in how many zeros are in a near trillion-dollar rescue? Here’s another novel thought: Don’t give customers credit when you have no clue if they can pay you back. Moreover, once you do extend credit, be all over them like a cheap suit if they start paying late.

Your first loss is your best loss.

Just ask the dead men walking — former CEOs of Lehman or Bear Stearns — who kept saying, “It isn’t as bad as it looks. We’ll save ourselves. We’ve done it before, and we can do it again.” Hello bankruptcy, goodbye billions! If these Pollyannas had acted a few weeks earlier, they would have at least salvaged something for their investors. The lesson for all businesses is, always have plan A and plan B covering worst-case scenarios. Then, if everything hits the fan at once, don’t be afraid to pull the trigger. Survival takes a plan combined with guts.

Forget Gordon Gekko from the movie “Wall Street” who said, “Greed is good.”

It’s not, and he was a jerk. There is nothing wrong with making it big, but not at the expense of others. Good business is not a zero-sum game. Always take care of your customers, investors and employees. You’ll be amazed at how much good comes to you even if you’re not first in line. There are many equalizers in the business world that work in mysterious ways.

This September, we saw what many pundits think was the closest thing to panic in the streets and a near meltdown that may have rivaled the big crash of 1929. What transpired in the last 15 days of this month from hell paralyzed some executives from taking action. Others had their heads on straight, such as the CEO of Merrill Lynch who saved what there was to save by merging before the lights were involuntarily turned off. Your job as an executive is to know your business and anticipate a crisis before it occurs. However, when your worst fears materialize, don’t behave like a deer in the headlights.

The Boy Scouts still have the best idea: “Always be prepared.”

MICHAEL FEUER co-founded OfficeMax in 1988 with a friend and partner. Starting with one store during a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide, with annual sales approximating $5 billion before selling this retail giant for almost $1.5 billion in 2003 to Boise Cascade Corp. Feuer immediately launched another start-up, Max-Ventures, a retail/consumer products venture capital operating and consulting firm headquartered in suburban Cleveland, Ohio. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. Reach him with comments at mfeuer@max-ventures.com.