What about the real “Bailoutable” businesses?
Posted by Donna BordeauxMonday, March 30th, 2009
Dear Mr. President:
As a CPA who focuses on helping small business grow to their potential and stay afloat, I am writing to you to express my concerns. It appears that my clients and many other business have somehow been missed on your list. My clients have strong efforts and challenging times, but somehow are not “bailoutable” under your plan. If their heads are managing to stay above water, the new stimulus bills and continued focus on the wrong ways to stimulate our economy have added a cement block to the top of their heads to push them under.
Big businesses like General Motors and Chrysler used to be small businesses at one point. At that time, there was no ability to bring cars in from overseas to compete, so their product was necessary and very sellable. The world has changed a lot since then. We have the freedom to choose cars that bring the highest quality and best prices to the market and people have spoken. The high cost of our labor force and its inflexibility has made this not be a viable business in the US. We used to decide on viable business opportunities based on the economic principals of “supply and demand.” Somehow, this theory has been eliminated under your rule in office. I think it still works if our economy will let it.
I beg of you to allow General Motors and Chrysler and any other industries in our economy to sink or swim. We have always had rules of doing business that worked — like pricing based on supply and demand, paying labor the “going market rate” for their skill level, and innovation from a necessity to compete. I see all of these fundamentals going out the window when the government steps in to bailout specific businesses or industries. Are jobs from companies that can no longer compete in the market place really the future of our country? We don’t make textiles here in the US any more — our world has evolved.
Just as I would with my clients, the advisors of GM and Chrysler should sit down and reinvent themselves to be viable, self-sustaining, and profitable entities. The first thing I do with my clients is a breakeven analysis and then decide where the chopping ax should land first if costs have to be cut. We look at the ability to be competitive. What are their strengths and weaknesses? If they are overspending, they must stop.
The alternative if the business cannot make the necessary changes is and always has been bankruptcy to reorganize debt or close the doors and “shut’er down”. That may not be the answer they want to hear, but sometimes the ship has to sink.
As one of the few Americans that actually pays into the national income tax system, I want my vote. I know several other companies that are viable businesses and that are much more “bailoutable” than your picks. I want my tax dollars invested in the entrepreurial spirit that invented this country and re-invests in it every day. My CPA firm as well as my clients’ businesses don’t want more government intervention or your bailout money. We just want to see our tax dollars be used wisely and here is how I suggest you do this:
1. Use real world rules for doing business: If I give you money for your business venture, you should have a plan to show me how it will be paid back and it should be a great idea for a business that is needed and will be profitable.
2. Inspire our population to work harder, not get lazier. If we work harder, then we should receive more reward, not less.
3. Call a spade a spade. Tax rebates and credits are only rebates or credits if you pay taxes. Otherwise, it is Welfare. That is a whole different department and should not be confused. Welfare should be for temporary hardships, not a handout that continues a lifetime.
As a frustrated American, I am realistic enough to know this letter will go no where and will not change your attitude or outlook. I want you to listen because I hear similar frustration day after day from everyone I talk with. I don’t understand how so many smart people can revolutionize our country with bright ideas, but then the exact opposite is what actually happens in our “democratic” society. I am powerless except in my own world.
Sincerely worried about our country and freedom,
Donna L. Bordeaux, CPA
Donna Bordeaux is a Certified Public Accountant and Personal Financial Specialist with Bordeaux & Bordeaux, CPAs, PA in Lake Wylie, SC (a suburb of Charlotte, NC). For further information about Donna or her firm, please visit her website at Charlotte CPA or by phone at 704.752.9845.Tags: Chrysler bailout, GM bailout, Obama bailout, small business bailout
March 31st, 2009 at 8:57 pm
Perhaps we CPA’s should get active and work for campaign finance reform. Until small businesses are on a level playing field for influence in the political system, nothing is going to change. And frankly, I put the AICPA, Big Four into that “big” category. At least two of the remaining “four” should be gone, but again “too big to fail”. We’ve allowed our country to be run by these huge organizations.
April 17th, 2009 at 3:26 pm
WELL SAID! Capitalism only works if you let it. Of course it begin to fail when you begin running this country as if we lived under communism/socialism.
Additionally, nothing is too big to fail… it might hurt more than the smaller guys but lets be honest, what could happen that our great country couldn’t recover from???? Those who make poor decisions should not be propped up my the American Tax Payer.
Capitalism is what established our country as the strongest nation in the world…lets not weaken ourselves with policy’s inconsistent with what our country was founded on!
May 19th, 2009 at 3:08 pm
I am a true believer in the free market economy. It is important to our economy’s long term health to reach the natural equilibrium where price is determined by unfettered supply and demand factors.
I believe in the American economic system which rewards hard work applied by all who participate.
I believe the influence of organized labor is an impediment to overall American economic growth. There was a time and place for organized labor, but that time is long since past. I also fervently agree that if a business cannot survive on its own it ought not to be artificially supported ad nausea.
The natural cycle of business creation, business infancy, high business growth, business sustainability, business decline, and eventually business death is a natural intuitive cycle. The continuance of a business enterprise ought not to be driven by its size.
Having said all that we must be ready for more extreme times if the large entity is permitted to participate in the natural cycle.