Posts Tagged ‘Government Programs’

A Lesson From Detroit

Monday, June 8th, 2009
Small Business on the Menu

Small Business on the Menu

In Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (Wiley, second edition, 2008), in the section titled “Sometimes Aid Can Be Harmful”, I wrote “Lesson 1: Time is your most precious asset and it is better spent on growing revenues and pursuing business opportunities than trying to qualify for many aid programs. These programs have onerous documentation requirements, each one is different and they generally yield a poor return on the time invested.” I thought of this sentiment when I read the leader in this week’s Economist which commented that “if Detroit had spent less time lobbying for government protection and more on improving its products, it might have fared better.” The trap is a psychological one: everyone wants to feel that they got something for nothing and having paid taxes, you want to recoup some of that payment. But it is not a wise investment of your time and an investment in this effort probably signals your own assessment of your business prospects. In a recent roundtable discussion of small business issues on the “Money for Breakfast” program of Fox Business News, I disclosed that I had tracked the hours I put into disaster relief programs post-9/11. On a pre-tax, pre-expense basis, I recovered $2.10 per hour of time invested, less than minimum wage. Other small business owners fared even worse. Government program requirements are so convoluted that you often need expert tax, accounting and legal advice to prepare the program applications. Obviously, the expense incurred with such service providers reduces your net proceeds. The Economist lead was titled “Detroitosaurus Wrecks”; unless you see your business going the way of the dinosaurs, invest your time in growing revenues and market share, not dealing with government programs.