A Bailout For My Business? No Thanks
Ford (F), General Motors (GM), and Chrysler have been pleading to Congress that one, two, or all three companies could collapse unless they get a multibillion-dollar bailout from the government. To secure the dough, they're making a variety of promises about improving operations and making more fuel-efficient vehicles. Bankruptcy, the auto execs say, is not an option. Of course, assuming they do take home a pile of cash, you can bet they'll change their tune when the government comes looking for it someday.
Perhaps you've seen bumper stickers springing up with saying such as "Where's my bailout?" and "$1 billion is all I ask." As a partner in a small business, I find myself having the same thoughts, but only for a moment. In reality, a bailout is the worst thing a small company could wish for.
A quick examination of the metaphor is in order. While the modern definition of bailout is "a rescue from financial distress," the term "bail" is a Middle English word that traces its roots to the Latin and literally means "a container used to remove water from a boat." When the term "bailout" is bandied about today, that's probably the image in most people's minds.
Let's run with that idea for a moment. The Big Three indeed appear to be sinking ships, and the only question is whether we want billions of taxpayer dollars to go down with them. But what about your company? If it's like mine, it has taken on water in this economic storm—it would be near impossible for it not to have. But waves crash over the bow of any well-built ship from time to time. It's the job of the captain and crew to keep the water from swamping the boat. How?
First, by unloading ballast. Every ship of business has unnecessary cargo in the hold, and what once helped stabilize the vessel may now be contributing to it plunging deeper below the waves. Letting go of old treasures is never fun, but in an economic tempest it's necessary. It's easy to shake a finger at the automakers' corporate jets, but careless spending creeps into small and midsize companies just as easily. You may be spending, relative to your revenues, more on office supplies than GM spends on jet fuel. In both cases, the waste has got to go.
Second, by calling all hands on deck. One positive outcome of an economic tempest is that it reveals which of your crew members are really on board and which are along for the ride. People should not have to be told it's time to bail water when they witness the effects of the storm. Some will be more effective than others in getting the sea back over the side, but all able-bodied persons can do their part by thinking creatively, working tirelessly, and being team players. Those that don't, well, see the first point above.
Third, by knowing when and how to trim the sails. There's a time to hunker down and a time to be determined not to drift with the tide—especially if it's drawing you into a deadly reef. Companies that don't continue to advance, offering innovative products at competitive prices based on efficient operations and smart marketing (BusinessWeek.com, 7/11/08), even in a recession, are headed for shipwreck.
For too long the Big Three have been failing on all three counts. What about your company? Is your ship, like theirs, in such bad shape that you should be seeking a safe haven instead of pretending you can stay afloat? Are you coveting valuable public resources that would be better spent helping people whose ships have already sunk? Or are you strapped to the mast, cursing the waves but determined to take the measures you need to stay on course?
Most small businesses—the backbone of the U.S. economy—choose the latter, and rightly so. It's what keeps our economy lean and mean, characteristics it has been lacking in recent years. We have a mess to clean up, all of us. But we need to face it with courage, weather the storm, and stay afloat if we can through our own humble efforts.
Merriam-Webster's offers another revealing definition of "bail out": "to abandon a harmful or difficult situation." Notice the verb abandon. That concept is anathema to true seafarers. It should be to business leaders as well—no matter how big or small their boat.