A lot of business owners have this idea that they are some kind of genius for making ends meet and running a “successful” business. I get that, starting a business is a huge risk and takes a lot of confidence. It takes a huge investment of both time and savings for any normal person, and if you don’t have a trust fund or your parents’ wallets to fall back on, it can mean quite literally risking everything. It’s hard work, knowing that failure means completely restarting your life, taking a variety of skills, and a good amount of luck for things to work out.
Restaurants, bars, and cafes especially have some hard yards to cover, building a loyal customer base and convincing local customer bases to come to your business and change their patterns in an economy where everyone has less to spend is no easy task. Very few become significantly profitable. Most skimp by on razor-thin margins, with more than 50% fail within the first five years.
So, when things work out, it’s only natural to feel a sense of pride in that fact and feel assured that you have at least done something right. There’s definitely truth in that, but people have a tendency to assume their skills in one area mean that they have skills in others, too.
Still, a good mix of the Fallacy of Irrelevant Authority and a healthy dose of Dunning-Kruger Effect will lead a great many bosses, managers, and owners to decide that their success is due to them being some kind of stalwart of trade, an economic genius. Any success that they’ve had will embolden them to ignore advice and make bolder changes that sometimes don’t make a whole lot of sense.
The problem is, these often become cost-saving measures, or small, greedy profit-driving policies that push more cost onto the customer and, thus, damage the customer trust and loyalty that has been built and that has made the business successful in the first place.
There might be a small pocket, a small period in time where revenue and/or profit increases, but soon the market will correct itself, and the higher costs being pushed onto customers will lead to a drop in transactions. This is, of course, just simple economics.
Author: Kayitsi.com
