During difficult economic times, it’s human nature (perhaps even a knee-jerk reaction) for any business owner or leader to immediately look at ways to cut expense and increase revenue. At least, that’s the thought I used to keep myself from throwing my laptop out of my office window when I read about the Wisconsin legislature’s budget bill that recently passed. Happily, though, I did keep my laptop intact and have perhaps even drawn enough valuable lessons from government decision-making to keep Broadcast Interactive and our clients from making the same mistakes.

Here in Wisconsin (where Broadcast Interactive is currently headquartered), the governor and legislature saw fit to increase the personal income tax (a clear negative, in my view) while also offering a business-tax credit to companies for each new hire made in the state (a positive step at first glance).

However, the timing of these tax laws is infuriating to me both as an individual and as a CEO – the personal tax increase is retroactive to January 1, 2009 (raising revenue for the state in 2009) whereas the business tax credit for new hires is only for hires made after January 1, 2010 (cutting expense for the state in 2009 while supposedly helping an economic recovery in 2010). What these legislators have now done is given individuals a surprise and immediate hit to their personal budgets while giving business owners every incentive to refrain from hiring for the remainder of the 2009 year. As a CEO, why should I hire anyone in 2009 when I can wait 5 months knowing that I get a 10% tax credit on their salary starting in January?

Fortunately, Broadcast Interactive is in a position where we’re growing so rapidly that I can’t afford not to hire new staff today (we’ve made 3 new hires in the past 2 weeks and will need to make 5 more before year-end). It is infuriating, however, to know that the state legislature will reward employers who delay hiring and effectively punish those that go ahead with growth plans.

This type of short-sighted cost-cutting and revenue-raising is exactly what needs to be avoided in a recession. For business leaders such as those that run BIM’s client sites, this means that cost-cuts alone *without* smart investments won’t get the job done. Cost-cutting is important, no doubt, but smart investments such as:

• Hiring one of the many solid digital sales people that are now available on the job market at a fraction of what they’d have cost 12 months ago.

• Moving away from expensive Windows-based technologies that cost a fortune in license fees and leave your firm with an inflexible solution.

• Increasing the amount of stock options and employee ownership in your firms so that employees have a vested interest in building the company along with management.

These are all good examples of ways to contain costs while providing for a near-term return on investment.

Here at Broadcast Interactive, we’ve tried to follow these principals and have managed the company in a conservative manner while keeping an eye to growth – BIM has no debt, we have grown EBITDA and revenue in each of the past 5 years, and we are hiring staff to the tune of 20% headcount growth this year, while still keep relative costs down due to our location in Madison.

Now if I could only get my state government to reward BIM for such behavior rather than punishing us.

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About Timur Yarnall, CEO Broadcast Interactive Media