WHY SMALL BUSINESSES GET IT AND WHY THERE IS HOPE FOR WASHINGTON – MAYBE
Every business manager understands that it’s good to run a little scared, especially if you are pushing the envelope. We often have to break the rules to move forward. Understanding whether the reward is worth the risk is critical and planning for every contingency is essential. Hey, you don’t need to be a nuclear physicist to see that there is uncertainty in the universe. Businesses large and small can deal with bad news but uncertainty is much worse than bad news. Uncertainty spins off all kinds of damage.
Like a hurricane that is birthing tornadoes in its wake, the government has created the fiscal cliff issue and worse has left lots of uncertainty… spinning off all kinds of chaos in the market place. It looks like Washington will probably pull its collective head out of the sand long enough to address the fiscal cliff issue but what about the debt ceiling? As they say, it’s not the fall that kills you, it’s the sudden stop. And though the threat of increased taxes is painful, hitting the debt ceiling is lethal for businesses that need access to capital. This is especially true for small and medium businesses which, unlike large businesses that are hording cash, need access to capital to grow. Thank goodness for the trillion-dollar coin.
If you are a political wonk then you may know that there are two outrageous options that the Obama Administration has available to force the GOP to raise the debt ceiling. The first option is to invoke 14th Amendment provisions and the second is to mint a trillion-dollar coin. And before we go any farther, please know I’m on the side of business, especially small business, so I have no love for either political party unless they are truly doing something for businesses, not just talking about doing something.
The first option that Obama might take is to declare executive privilege and raise the debt ceiling by invoking Section 4 of the 14th Amendment which says that the United States must meet all debt obligations. The latter option would be for Obama to take advantage of the fact that the Treasury, which has no discretion over gold and silver coins, has full discretion over platinum coins. This means that the President can instruct the U.S. Mint to mint a trillion-dollar platinum coin, increase the money supply, and thereby delay borrowing funds, in effect delaying when the debt ceiling is reached.
The trillion-dollar coin option is very unlikely to play out, but the story behind the trillion dollar coin loophole is a story about how government can really work hard for U.S. citizens. It’s a story about how leadership, taking risks, changing the rules, planning for every contingency and putting the customer (taxpayer) first can eliminate uncertainty, deliver value and lay the groundwork for a brighter future.
In 1996 I led a consulting firm called DiaLogos. DiaLogos helped Fortune 500 Companies and well funded .COM companies adopt aggressive customer driven strategies, apply analytics and automate all customer touch points. When the U.S. Mint called and asked us to come in and help we were dubious, to say the least. But Philip Diehl, the new Director of the Mint, was fearless. The Mint had just put together their first business plan… ever. They wanted to grow a piece of their business relating to bullion and collectable coins from $400 million to $500 million in five years. With Director Diehl’s leadership and a great Mint staff we helped radically reorganized the business, introduce new business processes and automation, and produced new products including the 50 state quarter program that Director Diehl himself dreamed up. Needless to say, we ran into a lot of naysayers whose first words typically were: “The government can’t…” But with aggressive “government myth busting” the team at the Mint changed the rules. Because Philip Diehl had strong bipartisan support on the Hill he was able to lobby Congress to allow the Mint full discretion over platinum coins and allow it to compete more effectively with the Canadians in the US and Japanese bullion markets. The results were incredible. While my consulting team was at the Mint it grew revenue from $400 million to $1.2 billion in just 18 months. The Mint went on to grow total profits to $2.6billion, a five-fold increase over the six years Director Diehl led the Mint, and capture 60% of the world-wide bullion market (up from 20%) before he departed in 2000.
I had a chance to see firsthand what good government and fearless leadership can deliver. Here at LeaseQ we are partnering with equipment finance companies, manufacturers and equipment dealers to radically improve the way businesses lease and finance equipment. We are a $620 billion industry ready for change. Unlike the average bank that won’t look twice at a new business or consider an established business that missed a payment somewhere along the way, we partner with smart, prudent finance companies that work very hard to find new ways to help good businesses get the capital they need. It would be refreshing to see Washington change the rules, run a little scared and try to push the envelope. But at the very least, we need them to stop generating uncertainty and work together long enough to do the business of the country so we can get back to doing the business of business and growing the economy. Thanks to Philip Diehl and the US Mint team I know there is no excuse for failure, whether we have to mint a trillion-dollar coin or not.For more on LeaseQ go to: www.LeaseQ.com For more on The Fiscal Cliff go to: http://wapo.st/Tje9mj For more on Philip Diehl and the Mint Team go to: http://bit.ly/TNVC1D