ECONOMICS: CHEAPER ALWAYS HAS A PRICE


I was driving through our neighborhood recently with my son on the way back from soccer practice. It was one of the first really warm days of Spring, so many of the local shopkeepers were busy outside their stores cleaning windows, sweeping sidewalks and putting out colourful chalkboard signs that promised great deals and upcoming sales. It was one of these signs that caught my son’s eye, outside the local Pet store. The sign’s proclamation was simple, if not devastating. Printed in a bold black font,

“Going out of Business Sale”

Reading the sign took only a second, but I knew the impact would last far longer. Ask most parents in our neighbourhood (any neighbourhood I suppose) and they will say the same thing. The local pet store is more than just a place to buy food for their cherished family member…. it’s a mini zoo, where they can spend an hour on a Sunday afternoon… a place that in their children’s eyes, is filled with wondrous creatures great and small.

As a proud Canadian business owner myself, I am always saddened to see a local business fail, but this particular closing was especially troubling.

My son knows all too well, the sacrifices a family endures when they own their own business…. the weekends spent working…. the late nights… the endless “give me second” references, signalling that he should come back to talk to me later. These are all too familiar, but made worthwhile when we succeed, which thankfully my company has been able to do. But I do not think until that very moment, he had realized that sometimes a business can fail, even one as wonderful and joyous as our local pet store.

Naturally he asked ‘why’?

“Could be any number of reasons,” I said. “But, most likely, it’s because they couldn’t compete with the bigger pet stores”.

“What do you mean, they couldn’t compete; because they are small?” “Does that mean your company will go out of business too?”

“No, we’re just fine. What I mean by ‘compete’, is that some companies (large companies) can buy the things they sell to customers much cheaper than smaller stores can, because they paid less to get them. So their customers are happy, because they save money when they shop there.”

“Yes,” he said jumping in… “but the people working in the small companies aren’t happy, because now they don’t have a job.”

“Yah,” I sighed. “That’s economics; cheaper, always has a price.”

Naturally this conversation, got me thinking about my business. Pathways is a learning technology company. We are by all accounts successful. Growing, employing Canadians. But we don’t sell widgets. We sell services that become products. eLearning, gaming, animations, simulations etc. Our cheaper options would come in the form of people. We could outsource. Many in our industry do. It’s easy. In most cases, no one has to be the any the wiser. We could pass the savings on to our customers. Then everybody wins, right?

I know that ‘cheaper always has a price’. I know that local talent must be fostered and supported for our customers to really enjoy what we’re selling. I also know that you can outsource yourself right out of a job. It all comes around eventually.

Before writing this entry, I asked one of my colleagues what he believed our competitive advantage was. He paused for a moment and said, “We care. All of us. We all care. We may not always be perfect, but we care about what we do – because we see the direct impact of our work on our clients. If you don’t know your customers, how can you care about them?

He was right.

Small business owners know how much each and every client matters. They have to, because their livelihoods depend upon each and every one of them. People often talk about small business being the life-blood of our economy, but the real measure of those words comes when we make choices to buy our pet food somewhere cheaper.

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1.888.961.6011

2200 Yonge Street

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Toronto, ON

Canada

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