Scared of the minimum wage increase?
Scared of Obamacare?
Scared of the many business challenges you don’t yet know about?
Fear not. Learn how to handle the never ending business challenges that will drive your weaker competitors under.
When things like Obamacare happen, or when minimum wage has increased, or when new regulations are passed down that the business owner has to absorb, how do you handle that? How do we deal with it as business owners?
The two examples are Obamacare and the potential for a minimum wage hike. If you use H2B visa labor, then you’re dealing with this type of stuff right now and you understand that there can be a hike in wages, not even related to minimum wage.
Here’s the way I think you think about this. You hear about something like Obamacare and it either frustrates you or you think this is awesome. I mean it just depends on where you stand on this legislation and the politics of all of this. Even if you’re in love with Obamacare, you’re in love with the idea of minimum wage increases, it does affect your business and you’ve got to deal with it. If you are up in arms about it, your job as a business owner is to keep a cool head, accept that this is coming, and figure out how to deal with it. What effect will it have on your business? How do you react? What will your competitors have to do versus what will you have to do maybe based on size? Obamacare is a great example because of the 50 plus employee rule.
You have to consider these things. If you’re going to get mad and upset and let it derail you, it will suck up all of your energy and you’re going to take it home to your family. It does nobody any good, and especially you. It doesn’t help you make wise decisions. It doesn’t help change anything. It is what it is.
As the business owner now, you know what you’re dealing with. It’s coming. Minimum wage might come. I don’t know. My job as the owner is to deal with it.
How do you handle it? Well, you get the facts. You don’t just get the facts from listening to talk radio. You don’t just get the facts from Drudge Report or CNN, that’s headline news. Know that all news is now created based on some person that gets commission, or gets paid based on how many times their headline gets clicked. The more sensational they can make it, the more dramatic and fear-based they can make it, the more money they’re probably going to make because that’s human psychology and that’s what works. You have to ignore that junk and you have to be realistic.
I’m not putting down any of the news sources that I just referred to, but whether it’s a conservative news source or a highly liberal news source, at the end of the day, the guys were all getting paid for who reads their stuff. They want you to read it, and so they make it as sensational and fear-based as absolutely possible. Then, it’s easy to get caught up in that stuff. As the business owner, you have to disconnect from that and you’ve got to think logically and consider the real facts and implications.
Go to your accountant and go to your lawyer. If you’re with ADP, go to ADP. Get real opinions. You can read Forbes. I like Forbes. You can read Drudge. You can read CNN. You can read Money. You can read these different articles, but you have to be careful because some of it is nothing but sensational information, and some of it is overblown. Some of it’s editorial emotion-based writing and not factual-based writing. You’ve got to decifer that.
A year before Obamacare was to go in place, I talked to ADP and our accountant. I talked to several other people that knew what they were doing, and if I remember correctly, even legal advise. I talked to several people. Now, ultimately Obamacare got delayed, which was fabulous for us. It bought us some more time, but it just kicked the ball down the road. We’re going to have to deal with this. We have our ducks in a row.
Now, we were presented all kinds of options. You could try to get involved in some insurance program so that you’d be grandfathered in, but there were so many unknowns and so many questions that people couldn’t answer that we chose not to take any dramatic action and took a wait and see attitude. But, we were prepared. We had the facts. That’s what I believe you do as a business owner. You get ready and you start making the changes so that when it happens, you’re not shocked. That’s what we did. When it got delayed, it got delayed, but we had a plan of action.
I think that’s how you have to think about it. You have to think logically, calmly, and get the emotion out of it. You’re making a business decision. You are a business owner charged with solving problems. You need to do it with a cool head and be rational about it. What is best for the business given where you’re at today? Get the facts. Make a decision. Make your changes.
If a minimum wage hike comes, it’s the same exact thing. You just deal with it. You consider what that means? What do you have to do with the payroll company? Do you need any legal advice? Do you need any accounting advice? How do you educate your employees on this? The great thing about a minimum wage hike is that it affects everybody, unlike say Obamacare. It’s going to affect all of your competitors just as it affects you.
Now, what happens if we all have to raise wages, who ultimately pays the bill? Not us. Our customer pays the bill. Otherwise, we’re a charity service who aren’t making money.
We figure out what the cost is going to be and we decide how much profit we need to make and we then tell our customers what we need to charge for our services. That’s what we do as business owners. If the profits are going to shrink and the costs are going to go up, we have a couple of choices. We can eat it and burn all of our financial resources and eventually go out of business, or we can pass the cost back to the client, back to the customer.
Minimum wage and Obamacare get passed back to the customer. The challenge is that some of your competitors will pass it back tomorrow, whereas others that aren’t on top of their numbers will pass it back in a year. Others even will go under as they run up their lines of credit because they don’t know why they’re not making any money. The challenge is that you’re dealing with all kinds of competitors that are not savvy and will ultimately run themselves out of business.
Your charge is to be savvy. Understand your numbers and pass it back to the client. You have to educate your client. But, you have to balance things like this with how fast your competitors react because you don’t want to be the guy that suddenly makes a huge price hike while the rest of your competition doesn’t. If you’re going to do it, you better do a great job educating your clients why. That requires planning and thought and getting your facts together and then being ready.
Ultimately, all of this gets passed back to the client. If you’re Amazon.com, minimum wage affects you, Obamacare affects you. If you’re Starbucks, it affects you. If you’re Target, if you’re McDonald’s, if you’re the city paving roads, it all affects you and it will all get passed back. At the end of the day, the consumer will pay for all of this. We, as business owners, will pass it back. It’s not all on us to absorb it. You can’t absorb all of this stuff. It’s an impossibility. If you do, that’s going to come your way over the next 10 years and you might as well shut down your business now because you will make zero money. You will lose money.
Know that you are not going to absorb this. You are going to creatively figure out how to educate your clients and pass the cost on to them. Everybody will pass the cost on. Do you think Jeff Bezos at Amazon is going to just lose more money now? No. He’s going to figure out how to pass it on. Do you think Microsoft, or any of these corporations, are just going to say, “That’s a bummer. We’re just going to no longer make money.” No, they will figure out how to pass it on.
Planning, education, understanding. These are the things you need to do. If you think about it that way, with a cool head and some time and perspective, you’ll work it out. That’s how I think you solve these problems and work through them. Good luck.
