Clearly, for years and decades, Detroit has not.
Unless you’ve been totally disconnected, it’s no secret Detroit’s been down a path of financial disaster for decades.
With population and job losses, shift in the manufacturing base and continued borrowing of money to offset revenue declines, Detroit’s experiencing a financial calamity of historic proportions.
Step in, Kevyn Orr.
It has taken the Emergency Financial Manager (EFM) just three months to, in essence, identify critical financial issues and proposals to rectify this situation.
He has reviewed the books and balance sheets and has uncovered a financial situation which places this great city on bankruptcy if nothing’s done from this pint forward.
All’s not lost. Not at all.
In fact, this is the first step in redefining the city’s finances as the city’s recrafting itself.
Other city’s have done it. Most notably, think New York in the mid-70’s. It was on the brink of bankruptcy, but averted it. Thru various strategies, it has increased population, revenues and as returned as the premier city in the country.
Take lessons, Detroit.
Now, if you’re a small business owner, take note of what Orr’s doing.
Let’s review key highlights:
1. Increasing revenue. Potentially leasing parts of Detroit’s many assets is a strategy for increasing dollars for investing purposes coupled with potentially lowering taxes, the hope is to attract revenues and residents into the city.
2. Reinvestment of resources. In essence, Orr’s proposing re-allocating and investing in areas where there are opportunities for growth–not where there’s been significant dis-investment of neighborhoods which are significantly abandoned. By re-allocating resources focused on growth, the city can then offer basic services important to residents who choose to live and work here.
3. Reducing costs. Constant borrowing is not a viable strategy for long term health and viability. The $15 billion debt was year’s in the making so now, the challenge is to identify areas where the city can be more efficient. Not only identify, but implement changes effectively.
There are many other factors for consideration to returning to fiscal health. Because of the severity, all parties need to swallow this pill. It’s a tough but necessary one to take.
So, if your an entrepreneur, Detroit’s story is a fascinating case study. Track it, understand and learn how basic business principles can help you avert your own “fiscal cliff”.
It’s important we don’t fall over the cliff–ALL of us.