What, if anything, can we learn from the fiscal cliff? Actually, probably more than one might think. The biggest lesson to be learn has to do more with our personal involvement in the political process than with business; but, our involvement in selecting the right individuals to represent our interests in Washington DC is vitally important to the wellbeing of our companies. The lesson I learned from the fiscal crisis is that we should not send politicians to Washington DC and expect them to do the job of a business person. Unfortunately we ask politicians to figure out a business plan so that the government would not run a deficit and that over time would get the country out of debt. Unfamiliar with business practices our elected officials did the only thing they know how to do … be politicians. They were more concerned about the advancement of their particular party affiliation and its causes than with seeing to it that a realistic business plan was enacted.
As business people there are things that we can learn from the fiscal crises but the most obvious elements we already know … you can’t continue to spend more money than you bring in without at some point not having the capability to service your debt and therefore go into default of your loans. But what are the other lessons that can be derived from this situation? I can think of a couple. Income is the first one that comes to mind. In government they only really have two ways to get income … taxes and fees and when congress looks at where they should get more money they look at the most obvious choice, the low hanging fruit, the people who are already paying taxes. Yes, congress overlooks a large percentage of the population, those individuals who pay no taxes. It will definitely be harder to develop this source of revenue and it might not produce as much income as the source they already have but it is an unexploited source. As business people we have the tenancy to do the same thing. When we are looking to increase income we look to the customers we already have, pretty much the same as congress. We are also ignoring a large population of individuals who don’t do business with us and will be much harder to derive revenue from. So the lesson to be learned … don’t just settle for the low hanging fruit.
The other place to learn a lesson from this crisis is through an analysis of expenses. In congress the politicians are so focused on their pet projects they fail to recognize that there is little benefit coming from their efforts and that these projects are a drain on resources. Often in our own businesses we do the same thing. There is a product or service that we have an affinity towards and too much of our company resources go into the development or promotion of that product or service. We should do an analysis of each product and services that our firms offer to determine if our investment in them is the highest and best use of the funds that we have available. While I can’t assure you that you will find products and services that need to be cut I can assure you that you won’t, like congress, pay for a bridge to nowhere.
Edward Boyle
CEO, Employing Broker
Katchen Company
Katchen Company, founded in 1962, is an integrated real estate company with its corporate headquarters inLakewood,Colorado. The company offers real estate development, redevelopment, property management, brokerage, consulting services, construction oversight and maintenance services to individual and institutional real estate investors throughout the greater Denver metropolitan area in Denver with satellite offices in Chicago, Las Vegas and Miami market areas.
