Business Model Chatter

 I took a business class while attending Louisiana Tech at night (while in the Air Force).  It was an interesting class because the professor (masters degree and all) had gone out five years prior with an idea....then failed miserably in 18 months.  He went through a learning process...writing up his own paper (30 pages) of where he went wrong in the process of building a business model.

He was brutally honest in the class....what he had been taught in the late 1960s for his degree...was great on paper, but in apply all that crap to reality, it was mostly worthless information.  It was stuff that college couldn't teach.

We spent 2.5 hours that night covering the singular topic, and I will admit....I had a lot of wise professors with Louisiana Tech...but this guy impressed me.

I left that night fairly well consumed on the topic of business models.  You have to have a written model in planning a business, and have an understanding of local/state taxes.  It impressed upon me....you have to account for sales taxes, property taxes, and the social security taxes of your employees.  You also have to plan out the cost of monthly operations with salary, and to be successful....you need plus-numbers.  

Meaning of plus-numbers?  You have to start out expecting dismal numbers for the first six months, and eventually see a trend developing where there is profit.  If at the first year concluding....this has yet to happen, you need to prepare for an end-process.

I sat this week looking at the California pursuit of $20-an-hour for restaurant workers.  Whatever business model they had for 2023....it's dissolved entirely now.

A burger operation now concerned?  If you had a burger-men dinner for $12 to $14 in 2023....under the new model.....you probably are selling the same menu for $16 to $18 now.  Figure the upswing on costs with taxation?  There's probably another 50-cents made for the state and local community.  

But here's the full impact....other folks (non-restaurant workers) now want the $20-an-hour deal.  Politicians?  Now in trouble.

People outside of California?  Well....they will want the $20-an-hour deal as well.  So at some point, you will see some Louisiana gas station, or some Alabama pancake 'house' doubling up their prices because their employees won't work for $15-an-hour anymore.....they want that California deal ($20).

Imagine driving up to bar where you used stop on Thursday nights after work....spending a couple of bucks on beer, and buying a $12 plate of food....but now....by the time you wrap up the beer, food and chatter with the buddies....you've spent $30. 

What I see coming?  I think a whole bunch of people are going to cut back on their budget, and just say 'no'.....they can't spend freely anymore.

That's the new reality.  And your business models?  Well....they will dissolve away.