"Poverty cycle" for businesses

We all have heard of "poverty cycle", where people are trapped in low
paying jobs, have to work a lot just to make ends meet, have no time
for education, start drinking on top of that etc.
This poverty cycle is real, and while it is possible to get out of it,
it takes a real feat and a superhuman effort.
What I want to bring up is that there is an analogy of poverty cycle
for businesses. This is includes one-man businesses, just as well as
larger companies. The poverty cycle for a company is being trapped
in a low return, high hassle business. Similar problems accompany
companies in poverty, such lack of funds to improve, lack of time to
think about doing things differently, being unable to reject
undesirable clients, etc.
A big effort needs to be made to stay out of the business poverty
cycle. Getting out of it, may be completely impossible (unlike for
people).
i
Reply to
Ignoramus28704
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Interesting thoughts, Ig. And I'm sure there's a lot of truth in it. A lot of small businesses are trapped, or trap themselves, in a "survival" cycle that's hard to escape.
I might point out that there is help for those people. I've seen a couple of small businesses helped by the "Geriatric Squad," the retired businessmen and women to volunteer for the SBA-sponsored state small-business help groups. It varies by state, but the one here in NJ has been a big help to a lot of people. They look at your business and tell you what you need to do.
They're worth it. They've been there, and they'll give an objective view of what's wrong, or what can be done.
Even a successful business can get some free "consultation" from these people.
Reply to
Ed Huntress
I got got in this cycle...
Profits on apples were declining so I over expanded. We were beating ourselves to death running all over and needed too much help to get it all done. One year, we had a near crop failure, so we cut all expenses to the bone. Didn't have to work near as hard. The surprise: net profit was higher.
We now produce 20% of the volume but higher price, and less delivery. AND there's time to go fishing.
Karl
Reply to
Karl Townsend
No. Traditionally, low income workers call to bring union reps to the job site and they rally out in front until the business agrees to big labor terms. (Like what McDonald's and other workers are doing).
In Europe, they rally and march several times a year just to keep pressure on businesses to stay on big labor terms. In the US they hardly ever rally or march. Therefore big labor contracts involve lower pay and less benefits.
(because there is no pressure on industry to pay higher wages)
Reply to
mogulah
Its certainly a problem in business to decide how you want to work, and how to stay in business doing it. All the business models they teach you in college work... on paper. The thing is unless you are the dominant bullying big player (Wal-Mart, Ford, Bass Pro Shops, Home Depot, etc) in your market segment many of those things are invalidated or distorted by necessity for customer service, conditions of your vendors, selection vs turn rate vs repeat & addon business.
Even for the big players there are times when its tough. Look at GM.

Reply to
Bob La Londe
...
I was big in Honeycrisp before it was even named. For several years I sold a great deal of budwood to several nurseries. I'm removing blocks due to old age now.
The crop loss was just a spring freeze, so no long term damage and I had the entire year to plan my moves. being a grower is a bit like playing cards, you have to learn to play the hand you're dealt. Believe or not, my top three worst years were bumper crops. My two best years were small crops. In other words if you lose money on every bushel, you can't make up for it with volume.
BTW, 60 is just a kid, right?
karl
Reply to
Karl Townsend
Before it was going for gawdawful prices?
I hope you got good money for it.
Blocks = acreage?
Yeah, farmers have always been players.
Were the bad years bad because everyone else had a bumper crop, too, and prices dumped?
Right. But if I ache like this at 60, I hate to think of living past 70, and don't get me started thinking about 80 or 90... Ayieeeeeeeee!
Reply to
Larry Jaques
Yes, as long as you believe it. :)
Reply to
Michael A. Terrell
One of the little sayings I've taken to heart is:
"I may be growing older, but I refuse to grow up!"
Reply to
Larry Jaques
We've noticed that, and have been meaning to talk to you about it!
Reply to
Michael A. Terrell
Aw, you Olde Fartes are all the same: Stick-in-the-muds. Pffffft!
Reply to
Larry Jaques
SCORE
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They have helps us make decisions many times over the years.
Reply to
Tom Gardner
It's hard to imagine how you contend with variables that you have absolutely no control over. It's bad enough without complete unknowns, I never want to play Poker with you!
Reply to
Tom Gardner
+1
Reply to
Tom Gardner
Not every job can pay rocket scientist wages. Entry level jobs teach people responsibility and skill and other marketable qualities. Meanwhile, people should have paid attention in school and not gotten a trophy for "showing up" at a sports game? $15/hr for a burger flipper is STUPID!
Why can't people have some responsibility for their lot in life and not just have everything handed to them or have some corrupt organization fight for unearned benefits using extortion, threats and blackmail?
Reply to
Tom Gardner
Hope for the best but plan for the worst!
Reply to
Tom Gardner
Yes! Probably even better. I forgot about them. The SBA may have shifted their volunteer operations to SCORE. They're one of SCORE's sponsors.
Reply to
Ed Huntress
some>> (because there is no pressure on industry to pay higher wages) >>
It's brilliant! Just think: How many people would put up with $20 hamburgers and $3ea condiments after that goes into effect? People would have to eat healthier foods. Win/win, wot?
We can have that again. All we have to do is vote out the current regime. No, I meant _both_ sides of the aisle. Much more easily said than done.
Reply to
Larry Jaques
Problem is that one way or the other the individual makes at least that much, as it costs at least this much to live in the US, assuming they are not living in the storm drains and dumpster diving for food.
If they are engaged in criminal activity, it is estimated they will cause *at least* 10X damage for the amount of money they "earn." Thus if you have a "car clouter," that steals a package worth 50$ from a car, they will have caused 500$ damage by smashing a window, requiring replacement. This equates to at least 300,000$ or more societal loss.
If they are employed in low paying jobs, particularly in high cost areas such as SF or NYC, the taxpayer still takes it in the shorts because of the social safety net costs for SNAP, section 8 housing, Medicare, etc. etc. for which they must pay (now or later).
It would appear far more efficient and equitable to require the employers to pay the 15$ (or more) per hour and include these costs in their register prices for their customers, rather than hiding these costs by foisting these off on the general taxpayers, many of whom are not customers.
In many cases this will indeed "squeeze" the returns of the corporate employers and their 1% stockholders, but they can afford it, based on their rapidly increasing share of the GDP and wealth.
The alternative is the creation/expansion of third world enclaves in the US economy, with all of their problems.
Correction of this problem will be expensive, but no where as expensive as not correcting it.
Reply to
F. George McDuffee
While you're practicing your arithmetic, you might want some real-world prices to put into your homework.
Fast-food restaurants' average labor costs -- total, front- and back-operations -- run around 25% of sales.
McD's workers average around $8.50/hour. Figure one manager for eight employees (which is about right), at $11.50/hour, you get an average of $8.83 for all employees. That represents $1.00 of a $3.99 Big Mac.
If you raised them all to $15.00/hour, that would add $0.80 to the price of that burger: It would sell for $4.79.
That's significant, but before you start thinking "$20 burgers," try running the numbers and get real.
Reply to
Ed Huntress

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