Tag Archive for 'marketplace'

It’s Time to Tell The Truth About Minimum Wage

Before any product or service is offered to customers, the price must be determined. The foundational element of this calculus are costs, which includes labor. In a true free-market economy, all elements of cost are determined by the marketplace. But in the U.S., we don’t have a true free-market economy because of mandates and subsidies imposed by the federal government, one of which is the minimum wage.

Alas, raising the minimum wage is being proposed again.

When the government is involved, politics, not reason, is the motivation, which isn’t so bad when the issue is politics. But politics has no place in what businesses pay for their cost factors, especially labor, often the largest cost factor.

When proposed, the national minimum wage was never some great egalitarian blow for the working man. It became law in 1938 as a cynical, protectionist move by the Congressional delegations of the northern textile industry – primarily Massachusetts –against their southern counterparts, whose lower, market-based labor costs made them more competitive.

Today the minimum wage has become a political wedge issue of the cruelest type, because research shows each increase actually hurts the segment it purports to help, especially younger, entry-level workers, like teenagers and minorities. The primary reason is that for decades employers have controlled the impact of an increase by reducing entry-level positions using various organizational steps. But today, technological advances have given all employers an increased ability to forgo entry-level hires in favor of low-maintenance, non-taxed innovative devices and/or software.

The results of two recent online polls reveal how these options manifest on Main Street. When we asked about their attitude toward the minimum wage, 82% of small businesses said the government should not be setting wage rates. But when asked how a minimum wage increase would impact their business, 76% said “Not at all.” The reason for the lack of concern by the sector that doesn’t like the minimum wage is likely because: a) they’re already paying more than minimum wage; b) they have legal ways around it to the disadvantage of the unskilled, increasingly unemployed worker.

An important goal of most businesses is growth, but adding payroll expense to achieve it is no longer a given. And so far, business owners are in charge of the decision to add workers or use other means to achieve growth. Nevertheless, increasing minimum wage does cause problems: an arbitrary increase distorts all wages as it becomes the new base from which other workers measure wage progress. If a small business adjusts all wages up in response, expenses rise. But if it doesn’t, morale declines. Furthermore, unions use minimum wage as a contract lever to exact from employers automatic, across the board increases for all organized workers.

In the marketplace, any increase in price must be justified by value delivered. But this logic is lost when labor costs rise by government fiat without adding one extra unit of productivity.

Write this on a rock … Let’s call the minimum wage what it is: A political lie that actually hurts poor and unskilled workers.

Jim Blasingame is author of the award-winning book, The Age of the Customer: Prepare for the Moment of Relevance.

Continuing education leads to more intelligent planning

The life of a small business owner is hectic, to say the least. Multi-tasking is the norm. So much of our day is spent reacting to the crisis of the moment, conducting the business of the day, and initiating our plans for the future. And once we acquire a level of competence in this life we’ve chosen, it’s natural to want to relax, settle in, and seek the ease that can come with familiarity and repetition.

But the marketplace isn’t a comfortable, lumbering vessel anymore, rolling along like a single screw trawler. It’s become more like a vibrant starship capable of warp speed. Indeed, it takes a much more knowledgeable person to successfully operate a business in today’s marketplace than it did even 10 years ago.

The great American revolutionary and legendary wordsmith, Thomas Paine, said, “I have seldom passed five minutes of my life, however circumstanced, in which I did not acquire some knowledge.” This from a corset maker who dropped out of school at 13.

You can’t anticipate everything, so react when you must. The business of the day, obviously, must be attended to. And what will you have tomorrow if you don’t plan for it?

But however circumstanced, before you succumb to the human tendency to rest on your laurels, make it part of your daily tasks to acquire some knowledge.

Make it your daily intention to learn something new that might help you react more effectively, operate more profitably, and plan more intelligently.

It’s not just about fear and greed

Fear and greed, it has been said, are the two primal emotions that drive the marketplace. As a maxim, these two words are handy in their ability to deliver the most meaning with the fewest letters.

But brevity paints with a broad brush and the result can deliver an unfortunate impression. Consequently, consider these other emotions that represent a more balanced and positive perspective on marketplace motivations, and which are very prominent in small business owners.

Warm-blooded, humans come with a high-maintenance physiology that requires us to eat regularly and have protection from the elements. When a customer does business with a friend of mine, instead of saying, “Thanks for the business,” he says, “Thanks for the food and shelter.”

Human babies take a long time to fledge from the nest. Our spousal and parental instincts are very strong emotions that motivated us to do quite a bit of aggressive hunting and gathering.

Humans are social beings; we create and live in communities. But the price of community is paid in the currency of responsibility. Our ability to think in the abstract produces the concept of self. And when self-awareness is blended with responsibility it creates the very powerful emotion called self-respect.

The harness-mate of self-respect, ambition motivates us beyond mere survival, and is perhaps the nearest kin to greed. But unlike greed, when ambition is forged with self-respect, a very positive alloy is born: the quest for excellence.

There are many things that separate humans from other life forms, but perhaps the most interesting is our tendency to tinker. Creativity wells up from a visceral spring from which pours our primordial passion to make something that doesn’t yet exist. It’s the free-spirit emotion that is always asking “why,” and “why not.” Unlike innovation, which is born of need, true creativity is its own reward. Creativity is to the marketplace what water is to life: you can have one without the other, but not for very long.

Curiosity may be our most powerful and elemental emotion, because when we pursue it, we do so with the expectation that it may create security for our family, self-respect for ourselves, and feed our ambition.

Look to small business to find all of the marketplace emotions.

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It’s The Age of the Customer - Get over it!

Your small business is now operating in a new age where customers rule. Sellers that transition to the new Age with their customers will be successful.

Watch as Jim talks about the transition from The Age of the Seller to The Age of the Customer™.

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Small business redemption with customers

There is an old marketplace proverb that goes: a happy customer will tell a friend, but an unhappy customer will tell ten friends. Well, that was a nice trip down memory lane, wasn’t it?

Today we have this thing called the Internet and all of its attendant vectors and applications, and in Internet terms, here’s the same proverb with a 21st century update: a happy customers will tell a friend, but an unhappy customer will tell the world by posting his indignation online.

So, how can you prevent such exposure to your small business in the first place? And how do you simultaneously redeem a relationship when your organization inevitably falls short of a customer’s expectation?

I interviewed Neil Creighton, with RatePoint, about the answer to these questions. We discussed how to use the power of the Internet with certain applications that can help you protect and leverage your business’ reputation. Click here to listen to what Neil had to say about this and, if you want, please offer your thoughts in the comments section.

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