Three Business Beliefs That Are Wrong
Posted on March 19, 2020 by Jerry Mills
1. You can make future profits without decreasing labor costs. The largest cost on the Profit & Loss Statement for most companies is their labor. While some of the per-hour costs of labor have been flat for the past few years, which are likely to change in the near future. While unemployment in the USA is at almost record highs, the pool of skilled labor is slim. Most of the unemployed are unskilled, especially in terms of technology.
The largest future increases in labor will not be in the hourly rates. Federal and local governments are starving for cash and will place an ever-increasing burden on labor costs. The new Federal health care system is an example. As I write this article, no existing professionals or the Federal government itself can tell us the future cost of health care to employers. We will also see significant increases in workers compensation, unemployment insurance, payroll matching taxes, the cost of filing tax reports, etc.
Investment in technology is the one possible way to fight these future increases in labor costs. Technology does not need health care, payroll taxes, unemployment insurance, sick pay, paid holidays workers compensation insurance, etc. It never sleeps. It works 24/7/365. It does not file frivolous lawsuits or get its feelings hurt. It can work in any country and in any language. In short, it may be the difference between you company’s future financial success or failure.
2. You can’t make money in a recession. There were hundreds of new first-time millionaires created during the Great Depression (1929-1941). Each economic down-turn creates new opportunities for entrepreneurs in a free market society. There are always customers that need products or services. One of the advantages of today’s economy is that we have a global economy. This gives us more opportunity to capture market share. We now do not need 100 percent of our business in the United States. Perhaps we can have 60 percent of our market share in the USA and the remaining in China and other countries.
3. You can grow your business without investing in technology. Every company has competitors, both known and unknown. The competition may be visible or hidden from open view. Regardless, the competition wants to take away your customers. They are currently working on a game plan to cause your customers to leave you and pay them. It is highly likely your competition is using high technology in their game plan. They know who you are and what type of technology you are using. They also most likely know the names of your key employees. A part of their game plan may be to take away your key employees to speed up the process of creating better technology than your company owns. It is in your best interest to start a “stealth” plan to improve your existing technology to not only keep your current customers but to also attract new ones. There are always better and smarter ways to find new customers, especially in a global economy.
Get Started With Jerry
Get Your own complimentary* Discovery Analysis™ from B2B CFO®
*Complimentary for qualified business owners