BUSINESS | SUCCESS | WEB PRESENCE
Mark Cuban is famous for saying on his blog that the most patriotic thing you can do as an American is “bust your ass and get rich“.
I agree with this for the most part, but I think it’s safe to say that no one reading this is going to achieve the level of financial prowess that Mr. Cuban has. Hell, the cumulative net worths of all the people who read this article in the next 12 months probably won’t equal the estimated $3,000,000,000 that he reportedly has (Mark: if you happen upon this article and feel this figure is low and insulting, please find it in your heart not to sue me Donald Trump style). That makes the sentiment a little difficult to comprehend in the context of everyday life for the average American.
The inspiration for this blog post comes from a recent conversation with a longtime client who happens to be the owner of several small businesses here in West Michigan. As part of a recent consultation, he and I discussed among many things the tactic of coupons, which is a staple advertising tactic in one of his ventures. After describing his decision to finally do away with the coupon promotions he’d been running for years, he went on to tell me of a particular customer who called him personally to complain about the lack of coupons available, and subsequently expressed her refusal to patronize his establishment because of this. I cringed.
You can’t fault a person for wanting to pay as little as possible for the things they buy or for trying to stretch a dollar. But at the same time, there’s a fundamental flaw in the mindset that a business should sell their wares for less than their worth in the marketplace.
photo credit: JD Lasica / SocialMedia.biz
If you have a product or service that people like or find useful, the best thing you can do for your clients and customers is run your business as profitably as you can. When a business is profitable, those profits are recycled back into the business in order to make the products and services even better, and in some industries more affordable. It doesn’t matter what type of business it is.
When a brick & mortar store is successful, it eventually accumulates enough revenue to open more locations. When a business has multiple locations, they buy more inventory at a time, which lowers costs per unit. Lowering costs per unit allows them to make the same retail markups while charging less. It’s good for the consumer.
These profits are also recycled into the community by way of jobs. As a business grows, the need for workers increases. This also increases wages. When there are more jobs are in a particular market or field, business owners need to pay higher wages to attract and retain talent. This also helps a community grow – when there are more jobs in an area than qualified people to fill them, that makes that particular area an attractive place to move and settle down. Look no further than what the tech industry has done in cities such as San Francisco and Seattle, or what the oil industry has brought to North Dakota.
A profitable company is also extremely likely to stay in business. So if you like that friendly neighborhood restaurant, visit them more often. And pay retail.
The flip side to all of this is a business that struggles to be profitable. When there’s no profit, there’s no reinvestment. Costs often have to be reduced which means product quality suffers and jobs are lost. When a business that isn’t profitable runs out of cash-flow remedies, they close and everyone loses.