Double Bogey Borrowing

Golf bunker

Image via Wikipedia

The Wall Street Journal reported that the town of Buena Vista, Virginia defaulted on bond payments for the local 18-hole golf course.  The town of 6,500 people had grand visions in 2004 when it borrowed $9.2 million for the golf course while visions of money-plums, I mean, homes, retail and hotels danced in their heads.  The bonds were enhanced with insurance from ACA Financial Guaranty Corp.  Now there are fewer golf rounds and the course has fallen into disrepair.  But the biggest oops is that the police and town hall buildings secure the bonds.  Their cops and city staff could end up homeless.  What lessons can be learned from this borrowing fiasco?

  1. The good times do not roll forever: It is wise to plan for a contingency like lower business sales, paychecks or sale tax revenue.  The fool plans to spend to the last penny of income.
  2. Work with what you have: If you earn a blue collar wage then budget for beer and pretzels until you make enough money to budget for wine and caviar.
  3. Be who you are:  If your organization is solidly meat and potatoes don’t try to emulate your competitor who is solidly pheasant under glass.
  4. Do what you know: If you are a great carpenter, don’t try to be a great pianist.  The accomplished and polished pianist will eat your lunch and make you pay for it.
  5. Keep a close eye on the person in power:  Humans tend to fog the part of the brain that regulates empathy and decision-making when they get great power.  Someone needs to keep their egos in check and bring some sanity to the planning meetings.
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About Michael Shelton

Your Business Coach Facilitating Delegation and Work Group Engagement Michael Shelton has over twenty-five years of business and military accomplishments, including extensive experience with one of the largest, publicly traded real estate investment trusts (REIT). He is a qualified business coach with assignments in cross-functional work group management, strategic planning, unit leadership, joint venture acquisitions, executive education, mentoring, training and merger integration. Michael has accumulated best practices for building committed work groups from more than $4 billion of capital markets transactions and commercial property development. He served as a commissioned officer and helicopter pilot in the U.S. Army, and earned his MBA from The University of Arizona. Michael has served as a major conference panelist and is the author of Cash Flow Rich, Winning Ways to Evaluate and Finance Real Estate. Today, he helps business owners get more work group engagement as President and CEO of Shelton Business Services, LLC in Scottsdale, Arizona. Disclaimer: I don't offer investment, legal or tax advice. Talk to your broker, accountant or lawyer for investment, tax and legal help. I might own stock in the companies I mention on-line. My posts, tweets and other on-line activity are my personal thoughts and don't represent my employer or company.
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