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Posted at 05:30 AM ET, 02/19/2013

Opinion: Congress should adopt ‘no budget, no pay’ approach — just like small businesses

Do you know what happens when small business owners lose money?


Should lawmakers go without pay if no budget is passed? Basu says absolutely. (Scott Eells - BLOOMBERG)
It comes out of their own pocket. For many, a loss at the end of any given month can make a difference between being able to put food on the table or not. For the owners of a local carpet cleaning service, laying off employees after a few slow days only to have to rehire them again is too costly. So their only option is to not pay themselves that month, and that puts an incredible strain on the family.

Now look at Congress. If they don’t balance the budget…well…they still get paid, their medical insurance still covers their families and their pensions remain secure. 

Last week, the House in its measure temporarily suspending the debt ceiling included language that threatened to withhold salaries from lawmakers if they fail to pass a budget by mid-April.   The ‘no budget, no pay’ idea is definitely a step in the right direction, tying compensation to performance.

 Predictably, however, those who are being asked to tie their pay to performance are balking. House Minority Leader Nancy Pelosi was quoted in a Wall Street Journal article that this was a “gimmick unworthy of the fiscal challenges we face.” I didn’t hear politicians complaining about tying executive pay to performance when the government bailed out the auto or banking industries, so the complaints that tying a politician’s pay to their ability to execute basic functions of their job rings a little hollow.

Business owners live and die by the success of their company every day, and it would behoove our elected officials to understand that more.

One benefit to living and dying by the daily sales count is that such pressures help put into focus the aspects of the business that are essential toward its survival and identifying things that are luxuries. When sales are slow, small business owners like me always look for ways to cut costs without sacrificing productivity or growth potential.

Here are a few strategies we use that Congress should try to put into practice to stay within its budget:

Re-evaluate office expenses routinely. You’d be surprised how much overhead can be eliminated just by determining what services could be bundled together. There are a plethora of things like phone, e-mail, data backup and mobile services that, if purchased under a packaged deal, can cut the overall bill significantly. 

We see multiple federal agencies having jurisdiction over the same issue, such as food safety (FDA, USDA and EPA). Streamlining such processes will not only ensure great compliance, but save money.

Reduce entitlements. When times are tough, entitlements should be evaluated, not from the perspective of how many votes it would cost, but whether the company or government can fulfill its mission without them.  We have a profit-sharing plan that, in good years, has been very beneficial to our employees.  When times get tougher, company contributions are reduced or eliminated. 

When the government is so far in debt there is no foreseeable way out, people should not assume they will be guaranteed  two months of vacation, an easy job that only requires 10 hours of work per week for a full time salary, or a cushy retirement.  Somebody has to pay for all that, and it’s most likely someone who has none of those benefits.

 ●Travel more effectively. Web conferencing is the way to go for most meetings. If you have to send staff on an airplane, make sure they maximize their time by seeing not just one customer, but several. Better yet, have them make appointments with a few prospects while they’re there if possible. We’re already seeing such efforts in the Department of Defense, and other agencies should follow suit.

 ●Don’t meet for meeting’s sake. Believe it or not, a great way to increase productivity without overhead is to ensure that when you do hold a meeting, there’s a good reason for it and action plans are the outcome of them. Otherwise, let people do their job and make things happen. If time is money, the feds could save a lot of it if they used meetings only when necessary.

 ●If you have to cut salaries, take the biggest hit. This is the time to lead from the front. The animosity that otherwise would build up from your staff will have long-term, negative repercussions toward any company. If business owners ask the team to take a 10 percent cut, they will usually reduce their own salary by at least double that. Congress could start cutting federal spending by reducing their own salaries and pensions.

Making budget cuts is never easy, but there are times when it becomes necessary. As small business owners, we know how impactful such decisions can be. Unlike Congress, however, we make sure the accountability for such actions and the effect is felt on us more than on our employees.

Eric Basu is chief executive of Sentek Global , a San Diego-based firm that provides information technology services, including security, program management, strategic consulting, engineering, software development and acquisition support, for government and business clients. He can be reached at ebasu@sentekglobal.com .

By Eric Basu  |  05:30 AM ET, 02/19/2013

Tags:  small business, congess, budget, deficit, debt, budget deal, sequestration, economy

 
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