two questions for business owners

[jdoe]

risk

[spex x]

[ QUOTE ]
At my old neighborhood I regularly went to the only dry cleaners in a 2-mile radius. All of a sudden, a new dry cleaners was going to be opening less than a quarter mile away.

I asked the owner one day if he was worried about the new cleaners.

He laughed, "No. I own that shop also."

It seems to me that he was eating into his own revenue, while basically doubling expenses. What am I missing?

[/ QUOTE ]

Its hard to say for sure without knowing his business better. Maybe he doesn't have the capacity at the current shop to service all his business. Maybe he only owns retail space and subcontracts the actual cleaning to another business. Maybe 1/4 mile is far enough. Maybe the cost of upgrading his current equipment is so expensive that it made more sense to spend a little more and phase out his first store entirely. Who knows.

[Mark1808]

[ QUOTE ]
suppose a guy owns and manages his own deli.

1. why doesn't he open another deli somewhere else?

2. why doesn't he hire someone else to manage his deli? is it because he would rather receive X dollars for managing the deli himself, in which he turns 'his own business' into an hourly wage job.

[/ QUOTE ]

Most small business people are simply buying themselves a job. Multiple locations don't make sense because the business model can't support the cost of a manager, any profit is simply the owners salary, often less than a manager would take to run the same business.

[spex x]

[ QUOTE ]
[ QUOTE ]
suppose a guy owns and manages his own deli.

1. why doesn't he open another deli somewhere else?

2. why doesn't he hire someone else to manage his deli? is it because he would rather receive X dollars for managing the deli himself, in which he turns 'his own business' into an hourly wage job.

[/ QUOTE ]

Most small business people are simply buying themselves a job. Multiple locations don't make sense because the business model can't support the cost of a manager, any profit is simply the owners salary, often less than a manager would take to run the same business.

[/ QUOTE ]

This perspective is patently false. There is no reason why a small business HAS to be a job for an owner. It doesn't. Small business owners can hire out management. In fact, there are thousands of franchisees all over the world the do just that. The key is to develop systems that make hiring the management out possible.

Not to mention the fact that most of the posters on this site spend more time running their poker playing businesses than many small business owners (including myself) spend on running their businesses.

Everyone trades time for money. The idea (to me anyway) is to trade as little of your time for as much money as possible. It is very much possible to trade a few hours of work for a very decent living, even if you do it by operating a small business.