Service or Margins - Which Is More Important?

A coffee shop that I used to frequent is for sale today. It's the third time in five years that the store has been for sale.

The original asking price of the folks who started the business five years ago was $130,000. Then new owners bought it. After two years, they put it up for sale at a price of $100,000. Now, the store is for sale again but this time, it is closed - out of business. The current owners are asking $75,000.

That means that over a five year period, the business has lost $55,000 in value or about 40% of its original value. Now, because it's closed for business, it's worth nothing more than the liquidation of the equipment. You probably could get it all for less than $50,000 because the current owners are still paying the lease on the building. It's costing them money to stay closed.

When people buy a business, they are usually attracted by the potential cash flow. That's what gets them excited - the possibility of a big payoff without a lot of effort. They don't buy the original dream, the original vision or the excitement of opening a new business. Because of it, most usually end up cutting corners, reducing costs and going "cheap" to find find ways to maximize profits. The original owners invested in their customers. They "built" the business. The new owners usually just want the revenue. New owners rarely have any history with the customers and the customers have no history with them. 

Rarely have I ever seen a business bought out and improved upon. Most either drop in quality or simply maintain status-quo. Yes, there are a few exceptions but over all, most people who take over an existing business do so because they are attracted to the cash-flow without a lot of work. But they soon find out that keeping a clientele is just as difficult as finding new customers. Without a willingness to do the work, the value of the business drops. In this above example, each new owner of the coffee shop lost money over time.

Customers don't frequent your business to make you wealthy. Customers come because of the service and they leave because of a lack of perceived value. You can't "cut" your way to greatness. You can't view your customers as marks to be fleeced. You must cherish and value your customers or they will find someplace else where they feel that.

Service is the key to success in any business. Margins don't matter if there are no customers. Service is what keeps them coming back - not margins. Service is what spreads the word - not margins. Service is what creates long-term loyalty - not margins.

People deal with people. People buy from people. People talk with people. Don't forget about the "people" part of your organization. Develop the Attitude of Service™ if you want to build a strong business. Service first, profits second. There are no profits without customers.

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Attitude w/ ATTITUDE

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