Gas. Most of us need it. Some of us have it. Not everyone can afford it.
Hey, focus – this is a development blog, not a gastrointestinal blog. I’m talk’n the liquid stuff our cars run on 
Seriously though, lately every community here in the states have been experiencing rising gas prices which in turn causes the price of products to rise. Trust me, truckers aren’t going to take all the hit. If it costs $1000 more to get that product to your local grocery store, the freight company is going to pass that cost to the store who will in turn pass that cost on to you, the consumer.
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But do increases in your paycheck work the same?
Uh no, they most certainly do not.
This means you make the same amount of money but have to spend a whole hell of a lot more to drive, eat, drink, and well, live.
An interesting thing happens here.
People who run businesses either sell products or services, or sometimes both. For the moment, let’s just talk about those companies that either sell a product or sell a service.
Because of this inflation cycle, the cost of products go up (i.e. the cost of living) while the cost for services go down (for awhile).
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Business people in service industries like landscapers, concrete layers, handymen, catering, and so on are hurting right now. They don’t have the luxury to “pass the cost down to the customer.” The cost to get the products they use for their customers (like concrete) still go up like the grocery store’s products, however, they have a much harder time passing this cost down to their customers.
In fact, because everyone’s hurting for money, normal prices service entrepreneurs have been charging are becoming too expensive for their customers.
Service entrepreneurs who don’t sell something you need to survive and can live without are in a bind. The backyard patio cover can wait, food for my kids cannot.
Most service based companies will lower their prices, run specials, and sometimes take jobs that pay very little just so they can feed their family.
As a consumer, you need to be careful. Just as the truckers don’t want to take the hit, neither do your service-oriented companies. That concrete contractor might use a lower quality grade of concrete for your slab.
It’s interesting how our government keeps telling us that we are not in a recession. I’m not an economist and if they say we’re not in a recession that’s fine. But what I do know is businesses and individuals are hurting right now. People still want those back patio covers, those beautiful landscapes, and those swimming pools, but they want it for nothing because they have nothing.
If you’re a business owner who sells a service, now might be the time to check out my article I wrote on budgeting. You really need to cinch down and try to weather the storm.
Don’t worry, it’ll pass. Gas prices will go down just as housing prices are.
If you’re younger and just starting out, follow my budgeting plan the best you can because it will help you in times like this – and trust me, in about 10-15 years, times will seem hard once again. It’s a cycle that happens every so often.
And if you’re an entrepreneur who’s hurting right now and is about to go under, do some serious thinking about what your real needs are.
What can you live with?
Or better yet, what can you live without?
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June 3rd, 2008 at 11:27 pm
Haha John, Gas
What an informative, and true post. It’s a vicious circle, and the increased costs do get passed on to the consumer.
Being self employed, in excavation, we too have seen a slow down. Can we raise our prices? No. But we can become more efficient.
And yes, consumers should be asking, “do I really need this”. Often, the answer will be “no”
Barbara Swafford’s last blog post..Blogging – Secretly Affecting Lives
June 4th, 2008 at 6:19 am
Hey Barbara. Our landscape company is the same way. It’s slow. People still want landscape work, but at half the cost it seems.
From a contractor’s point of view, yes we look for ways to be more efficient. From a buyer’s point of view, they should make sure the contractor is not cutting any corners.
Being more efficient like driving to bids in a smaller car and not a truck is one thing, but there are some (many) contractors out there that will buy cheaper products that won’t last and never inform the customer.
And yes . . . it is a vicious cycle. Especially for those entrepreneurs who sell things that people don’t need to survive on. In this case, one has to ask themselves, what other methods or changes should I do to supplement income?
I suggested to my brother (a guy who knows any and everything about landscaping) that while it’s slow and he’s home a lot he should write a “Guide To Las Vegas Landscaping” eBook and try selling it on the website. Then why not shoot for the moon and go for transposing it into a book?
When times change, our thought processes have to change – and so does our marketing.
June 4th, 2008 at 1:54 pm
Hi John,
Gas has become a major part of business planning now. With no control over the price of gas people are forced to think about alternative ways to cut costs without sacrificing their product and workmanship. You know your budgeting strategies have helped our landscaping company during these stressful times. I don’t know John maybe it is a gastrointestinal problem, I know I feel nauseas after I get gas for my car!!
Theresa
June 5th, 2008 at 7:48 am
@ Theresa – my little 4 cylinder car went from $32 to fill it up to yesterday I broke the $50 mark! That’s some increase.
Meanwhile, only some hourly employees have managed to get a raise of maybe $.25 in their paycheck.
What I’m getting at is maybe you’re right. Maybe this article is a gastrointestinal problem!