P R O F E S S I O N A L . . . C O N T R O L L
E R S
A
Brief Economics Lesson © 1999
by Adrian W.
Hollander, C.P.A., CISA, CIA, CBA,
CFSA,
President of COMPLUS Inc. – Professional Controllers
Business is color
oriented -- GREEN (not black or white). We
are making buying decisions more and more on the “quality” of the product
rather than simply personal relationships.
The “old-boy network” is disintegrating (and rightly so) -- partly because
of investigative journalism. Relationships
do count, though. Tie scores do go to my
friends, but it has to be at least a tie.
Providers of whatever a
business buys: material, labor, plant, equipment, operating supplies,
professional services, etc., expect to be paid.
Business needs capital to operate.
There are 3 categories and each has a cost:
- Revenue - The cost is performance.
- Debt - The cost is repayment plus a
rental fee (interest).
- Equity - The cost is CONTROL.
If you’re an entrepreneur, which
would you prefer?
Government is an
expense. We should not depend (long-term)
on government as a revenue source. One
of the hallmarks of the
As the costs of transactions
declines, the average size (number of employees) of business units shrinks. Big business revenues may be increasing, but
their employee head-counts are decreasing.
New technologies are changing the nature of jobs, and who employs the
people, now several times in one lifetime.
Performance of tasks that formerly required several employees can now be
bought from a service vendor at a fraction of the old cost. According to the Chicagoland
Chamber of Commerce, about a year ago, there were almost 300,000 businesses in
the
Applying a little reverse
psychology, here’s a recipe for economic depression.
- Buy from strangers.
- Sell to our friends.
- Pay 40% of revenues in taxes to government.
My goodness,
isn’t that what most of us are doing?
send e-mail to: AHollan700@aol.com