The woes of the province cost the Progressive Conservative Party its reputation, future generations their Heritage Fund, and taxpayers in that province a pocketful of cash.
Not only that, but the result of Alberta’s lagging economy put pressures on other provinces, like B.C., and the federal government to ensure that pipeline projects are successful eventually.
“So what?” you might say. “That has nothing to do with small or midsize business … or does it?”
What could your business learn to avoid similar results putting you in the red?
Don’t put all your eggs in one basket.
Albertans have been reliant on the revenues from oil for generations to ensure that the government can provide services for the people. As a result, there was little diversification of the economy. There was in effect a lack of revenue from multiple sources.
Governments typically rely on a variety of taxation to ensure operational fiscal management. Alberta failed to diversify its taxation and even when times were bad it has failed to impose even minimal taxes.
If our businesses are to be successful through boom and bust periods, we need to ensure that we have diverse income streams that allow us to avoid dipping into our savings during slow periods.
Start thinking of adding value.
Alberta, and most of Canada for that matter, are like most Third World countries: we’re selling off our resources for a pittance instead of adding value and creating a thriving economy.
There has been little energy, effort or money put toward ensuring that the products leaving our borders have more value than raw logs or crude oil.
Often in our businesses, we fail to see how some simple steps in the processing of our products or services could ensure that we make more margin to give longevity to our business when prices drop for our commodity offerings.
Don’t let outsiders run your company.
In the early 2000s, Alberta’s Premier Ed Stelmach tried to increase the taxation on oil companies and the amount that the province got on a barrel of oil. The oil companies raised a fuss and spent millions of dollars painting Stelmach as someone out to ruin the province.
In essence, their opposition cost Stelmach his career and Albertans their inheritance.
This can happen to small and medium businesses as well if we aren’t vigilant.
It’s easy to be bullied through social media into accepting positions that don’t make real sense for our business because of outsider intervention. I’ve worked with several companies that have faced social media campaigns led by people who had an agenda of opposition to a company stance. Most companies cave to this opposition instead of doing what’s in the best long-term interest of their business.
Be fiscally responsible.
The Albertan government bureaucracy and politicians knew long before the taxpayers that their model of spending was unsustainable. Yet they continued to push forward.
In business, we can get caught in the same trap. Unfettered capital spending without regular review and contemplation can lead to cash flow issues and hampered core business activities.
Albertans and taxpayers throughout Canada should feel let down by governments that have failed to have the foresight to put plans into place that protect their long-term interests.
One of the first things I typically ask business leaders I’m working with is: “What will this business look like in 10, 20 50 years?” Like governments, most businesses haven’t put much thought into the long-term sustainability of operations. But once they do, they quickly realize that they need to think in a different way to succeed long-term.
Alberta taxpayers aren’t the only ones feeling the sting of government ineptness.
Recently I read the financial report of the B.C. provincial government and its situation is not much better than Alberta’s. British Columbians too will be in for a shock when the wood supply dries up and the other raw resources are shipped to foreign markets.
In fact, should there be a general slowdown in the economy of Canada, it should not to be surprising if taxpayers and businesses across this nation are forced to dig much deeper to cover the interest on government debt – a debt that could have been avoided.
Important lessons must be learned by business owners across this great country to achieve the success they’re working so hard to accomplish.
Troy Media columnist David Fuller, MBA, is a certified professional business coach and author who helps business leaders ensure that their companies are successful. David is author of the book Profit Yourself Healthy.
The views, opinions and positions expressed by columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.