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Friday, Mar 29, 2024

State Needs to Develop a Business Plan

In his well-known and highly acclaimed book “The E-Myth,” Michael Gerber said that when one starts a business one should always “begin with the end in mind.” To enable achievement, the ultimate goal or goals must be set first. After the goals are set, the policies, procedures and processes necessary to achieve them can be developed and implemented. In developing a successful business, all of these elements should be embodied in a comprehensive business plan that can be followed, monitored, measured and changed when necessary. This business plan becomes the figurative Bible of the business. According to the Los Angeles Economic Development Corporation, in the year 2000 California surpassed France to become the fifth largest economy in the world. Based on this information, I believe it would be accurate to conclude that our state is a large business and that we the people, the stockholders and Board of Directors of this business, are entitled to have a true comprehensive business plan. In this large business known as the State of California, our governor is the CEO. He must be the one to spearhead the development of the goals and the business plan. It is the legislature’s responsibility to create the policies and procedures and it is the responsibility of the many department heads to implement the plan. Since the organizational chart of the state is somewhat different than that of a private sector business, the CEO doesn’t have direct control or hiring and firing authority over those who are responsible to set the policies and procedures. For this reason, the business plan for California must be a collaborative effort between the governor and the members of the legislature. To develop a business plan that has a chance at success, the Governor must get Legislators to buy in to the ultimate goal or goals. I believe that Gov. Schwarzenegger, who refers to himself as the “bipartisan governor” has the best chance of achieving this of anyone that has served as California’s governor in many years. Much of our legislation to date has arisen from crisis management. This is the result of a reactive rather than a proactive approach. It is also all we can expect without a vision for the future that is shared by the governor and the legislature and a comprehensive plan that is agreed to by both. Currently, it appears that the closest thing to a business plan we have been provided is our state budget. Unfortunately, a budget is only one element of a plan. Without a comprehensive plan a budget is meaningless. Additionally, the budget that we have is merely an allocation of funds with absolutely no overall goal or plan in mind. It was developed in an ineffective attempt to cover the costs created by legislation that was passed and implemented on a piecemeal basis to satisfy many special interests. All it actually does is defer the deficit to future generations. I recently heard that Gov. Schwarzenegger has a vision to grow our economy and reduce our deficit by attracting businesses to California and retaining those that are currently located here. Recognizing that California will never be one of the lower-cost places to do business, he believes that we must create a value to business owners that far exceeds the excess cost of doing business here, in other words, to increase their return on investment. He also recognizes that to do so will require a comprehensive business plan. He knows that to attract and retain businesses we must provide a better infrastructure, a quality workforce and the ability to export and import products to and from other states and countries. He also knows that to do this, there must be affordable housing, excellence in education, quality healthcare and adequate transportation to efficiently move people and goods and that future legislation needs to concentrate on strengthening these areas. We can no longer afford to allow random legislation to cripple our economic strength and growth. It is our job and responsibility to encourage the members of our Legislature to share our governor’s vision and to work with him to develop and implement a comprehensive business plan. It’s time to apply sound business principles to the largest business in which we share an interest. We do not need more random legislation for the purpose of demonstrating productivity by each legislator. I have chosen to profile the following bill this month: -AB 3021: This bill would require employers with more than 250 employees to annually report to the EDD the number of individuals employed by the employer, or hired as independent contractors within California, outside of California but within the U.S., and outside the U.S. during the previous calendar year. The bill would also require the EDD to post this information on its website and report it to the Senate Committee on Labor and Industrial Relations and the Assembly Committee on Labor and Employment. Penalties would be assessed against employers that failed to report or that underreported. The result would be more burdensome requirements and additional costs to employers without any clear benefit or additional value to employers or employees leading to lost jobs and a disincentive for hiring. Status: Passed Assembly and Senate, vetoed by governor on 9/29/04. Valley Legislators voting for bill: Assembly, Frommer, Levine, Montanez, Pavley; Senate, Alarcon, Kuehl, Scott. Valley Legislators voting against bill: Assembly, Richman, Strickland; Senate, Margett, McClintock. Valley Legislators absent, abstaining or not voting: Assembly, Koretz. Gregory N. Lippe, CPA, is managing partner of the Woodland Hills-based CPA firm of Lever, Lippe, Hellie & Russell LLP (LLHR) and a director of the Valley Industry and Commerce Association (VICA).

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