If I Ran My Company Like the Federal Government, I’d Be Out of Business

On March 1, 2011, the Government Accountability Office (GAO) released a 345-page report showing that the federal government is $14 trillion in debt and explaining some of the reasons for this debt.

  • “Overlap and fragmentation” where agencies duplicate their efforts and waste money. The Washington Post reported that the GAO said: There are “47 job training programs, 80 programs to help poor and disabled people with their transportation needs, and 82 distinct programs on teacher quality.”
  • Lack of understanding about how much is being spent on certain things, such as biodefense, where more than two dozen presidentially-appointed individuals have some lead responsibility.
  • Lack of accurate evaluation to know whether funds being spent have any efficacy. For example, the report says: “"Little is known about the effectiveness of most (federal job training and employment) programs."

What businesses do right

Business owners take (or should take) certain important actions to make sure that their companies are not only solvent but profitable and avoid making the same mistakes year after year.

  • Planning. Businesses craft budgets very carefully without having to bow to political pressures; only monetary issues are involved in the process. Businesses also create business plans and marketing plans to keep them moving forward in a deliberate fashion.
  • Insight. Business owners make sure to understand fully what their decisions will mean. Will a new program (i.e., product) be effective? Market research is done upfront before huge dollars are invested. Can the company afford the new program? Break-even points, profit margins, and other important financial data are forecast before the program even begins.
  • Analysis. Businesses evaluate their actions on a regular basis to know what is and is not effective in boosting sales, increasing profits, or achieving other aims. Businesses can’t afford to continue with programs that lose money, with employees who are incompetent, and with vendors who are tardy or provide sub-par products or services. When something isn’t working, things get changed; there usually are no sacred cows.

Bottom-line approach for government

If government used the same actions as business owners—planning, insight, and analysis—we’d all be better off.

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