Mr. Obama went to Toronto last month to the G-20 meeting. The G-20 is the premier forum for international economic development that promotes open and constructive discussion between industrial and emerging-market countries on key issues related to global economic stability. Mr. Obama’s purpose at the meeting was to urge other nations to expand government spending or face “renewed economic hardship and recession”.
Canada, Germany, Great Britain and most other countries rejected outright Mr. Obama’s invitation to go deeper into debt and spend more money on stimulus. The president of the European central bank took direct aim at Mr. Obama stating that Mr. Obama’s logic was flawed.
There are great lessons we as business owners can realized from Mr. Obama’s visit to the G-20 meeting.
- Your Management Team – Mr. Obama selected his management team (cabinet) and neglected to find anyone with high level management experience. There are no business CEO’s on the team and there are only 2 people in his inner circle with any type of business background. The management issue is compounded when the CEO of the country (Obama) has no management experience. Your management team is a phenomenal resource, the stronger the team the better the decisions. One of my clients make an acquisition of a company and in that acquisition, they also acquired a high level executive with strong industry management experience. The acquisition was a prize and the acquired executive dramatically propelled the company forward. Over the next 10 years, the company went on to win many outstanding awards for growth and financial performance.
- Objective Assessment – It is difficult for any organization to have checks and balances when all decisions are made in a vacuum. Obama’s inner circle has made the decision that dramatic growing government debt is desirable (the 1st bail out, universal health care, cash for clunkers, General Motors, Chrysler, etc.). Closely held businesses have some of the same challenges. Many times the owner/president of the company doesn’t have anybody to discuss direction, major decisions or how to value opportunities (they have very objective input). It is difficult to have a discussion with yourself and get all the options out on the table. Few closely held businesses have board of directors that are different than the employees of the company. It is difficult for an employee to be objective about issues when the owner of the company signs the paychecks. An outsider (consultant for example) doesn’t have to be smarter than his client to add value, just as a Tiger Woods’s coach does not have to be a better golfer than Tiger. The outside perspective, the freedom to ask questions, the ability to pull his viewpoint above the day-to-day challenges and look at the bigger picture, these are the things that consultants bring to the client.
- No Free Lunch – Peter Drucker PhD, one of the world best known management consultant, teacher and author told my MBA class at Claremont Graduate School many times, if there is only one thing you learn here remember: “there is no such thing as a FREE LUNCH” (that is impossible to get something for nothing). Everything has to be paid for at some time, either in the front end or back end (depending on your marketing strategy). Business owners all know that if we give away our product without a strategy to make money, we will go broke. Here is what is frightening: over 85% of business owners (closely help businesses under $20 million in revenue) don’t do a good job of profit or cash flow planning. Profit in your business is the grease that keeps your business turning and growing. We have to be fiscally responsible; our elected representatives need to understand this concept or the country will go broke.
Much of what I do with clients revolves around helping businesses improve their management team, focus on accountability and make much more money. If you need help, please give me a call or shoot me an email.
Currently the national debt (principal only) is $13,145,954,178,723 or $118,450 per tax payer or $42,000 per citizen. The 2008/09 stimulus package was $3.27 trillion and the Obama health care bill is estimated to cost another $940 billion over 10 years. Mr. Obama is floating the idea of additional deficit borrowing to support more spending. We cannot borrow our way to prosperity; most all business owners already know that excessive debt doesn’t create wealth. In today’s banking environment, it is critical that business owners manage their debt very carefully by insuring that their companies are making money (similar to a government budget that shows a surplus)
Thanks for posting the article, was certainly a great read!