Wednesday, February 4, 2009

Obama Wants Caps on Fat Cat Payouts

What? No golden parachute?

Why be a big executive in a big company, if you can't run the company into the ground, and get a generous bonus for your work?

Billions in Losses, Turning a Corner, and Millions in Stock

Back in 2007, the CEO for one of America's 'Big Three' automakers got, as a bonus, a cool $4,100,000 in stock, plus 3,560,000 stock options (at an excise price of $6.14). The company had lost $2,700,000,000 that year. It's okay, though: the CEO said that his company was turning the corner, and would be profitable. Soon.

The stock market seems to be more tightly connected to the real world than many CEOs are, so that $4 million bonus may not be quite as big as it seems. Not now.

Golden Parachutes, Obscene Bonuses: Not a Small Business Issue?

Bizarre bonuses and gigantic golden parachutes don't seem to have much to do with small business owners. Particularly sole proprietors like me.

Let's say I was talking to myself:

"I lost $2,700,000,000 this year. Not to worry, though: I've turned a corner, and things will get better."

"You mean, I'll make a profit? When?"


"Well done! Here's $4,100,000. Don't spend it all in one place."

If I could lose money in the ten-figures range during one year, and get paid $4 million for it, I could retire after that year. But it's not possible: ethically or practically.

I don't envy the Ford CEO, though. He seems to have gotten his bonus in Ford company stock. I don't know what that's worth, now that the stock market is melting down, but it's probably not what it was in 2007.

Big company shenanigans do affect small business owners. The most obviously-affected businesses are eateries and stores near the factories, and where the workers live. When people get laid off, or fired, they're not likely to spend as much as when they got a paycheck.

It doesn't stop there, of course, business owners buy supplies and (sometimes) hire people. When business falls off, business owners don't buy as many supplies, and may have to drop employees.

That means that the former employees won't be spending as much, and neither will the suppliers.

You get the picture.

So, even if you didn't own Ford stock, what's happening to American automakers will affect you, if you're doing business in this country.

Whatever is a Small Business Owner to Do?

I've done a little poking around, and found soem advice that doesn't sound too crazy. It's pretty obvious, but:
  • Keep track of cash flow
    • If more's going out than coming in, that's not good news
  • Don't need it? Drop it
    • Luxuries are nice, but don't pay for equipment and services you don't actually need
    • That goes for employees, too: and that's a lot harder
  • Cash, good: Credit, bad
    • Loans and credit cards are cool - and expensive
  • Pay attention to your customers
You're expecting startling insights and useful details? What am I, a consultant?! I'm a middle-aged writer and artist, trying to make his own business work. When I know what I'm doing, I'll let you know.

Meanwhile, here's a thought: many people are looking for ways to do what they need, or like, to do - for less money than they did a few years ago. If you can help them do that, you've got yourself clients or customers.

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