Apparently, I HAVE A LIBERAL FRIEND.
Ya’. I’m as shocked as your are.
His name is Peter. And he’s pretty cool. Alot of fun……..and he’s smart. I probably should have known, though, because he’s good at working with gov’t. LOL.
Anywho, he stopped by my office today to ask me how things were going, what was up, etc. We talked about how business is slow……….and about how much I hate Obama. He got a strained look on his face. Now, I didn’t mention before, but Peter is BLACK. And I’ve never really thought about it before, because I didn’t think it mattered. I knew he was supporting Obama during the election, but his reasons were pretty reasonable and it never seemed to me like it was an ideological or racial issue. Peter’s just not like that.
Anyway, I couldn’t ignore THE LOOK. So I said “Alright. What could you POSSIBLY still like about this man?” He’s a reasonable person, I really wanted to know! I think he was afraid to answer. So I kept poking him, OF COURSE.
He said, “Okay, well, how about HEALTHCARE?” Now I was shocked! He was going to use one of the most TOXIC topics to justify?? Wow. This oughta be good……….
He proceeded to tell me that his company’s health insurance premiums were going to go up 40% this year. I didn’t have the heart to tell him that the CBO was scoring ObamaCare, ALL VERSIONS OF IT, and was predicting that premiums would go up even MORE if this legislation is passed. I didn’t want him to have an epileptic fit right there in my office.
He went on to say that insurance companies make too much money, etc., etc. Basically spewing Pelosi’s “big bad insurance co.” talking points. When I pointed out to him that health insurance is the most heavily regulated industry in America, and that they have the smallest profit margin of any company in the business, he said, “Well, they have larger numbers, so those percentages should be even SMALLER! The amount of money they’re making is huge, and they shouldn’t get to do that.” I almost fell on the floor. BECAUSE PETER IS A PARTNER IN A SMALL BUSINESS. No kidding.
So the “debate” ensued. I tried explaining that profits as a percentage of investment was a big deal; think percent return when INVESTING IN THE STOCK MARKET. The more you invest the less you get back?? He wasn’t having it. Then I had an idea. I explained it THIS WAY:
When someone starts a business it’s usually in their basement. : ) Okay, so you’ve got one investor, one employee. Pretty soon your business grows because your idea was AWESOME!
So you get an employee, that turns into a partner. Suddenly you’re hiring employees, you rent some space, and you’ve got a hot little receptionist that wears short skirts. (I love this business!)
Pretty soon you’ve got FOUR partners, you branch out into different markets, more employees…….now you own your own building, you’ve got 500 partners, and a Board of Directors. NICE WORK!
So, at every step that your company grows, your percent of profit compared with total receipts gets smaller and smaller. And with every smaller percentage of profit, that percentage (while a larger amount of cash in total) SPLIT WITH AN EVER GROWING GROUP OF PARTNERS (which you have to take on because as you grow, the percentage of return on capital investment is shrinking).
This inverse relationship between growth & percent return on investment would mean, theoretically, that they meet at the max-min point where the company had grown to a size where profit was negligible At that point growth in your business must necessarily STOP. (WHERE ARE THE JOBS??) You can no longer create additional jobs because the money coming in is only covering expenses. There is no money for capital investment.
ADDITIONALLY, the partners have been getting an exponentially shrinking return on their investment in the business along the way. (Water cooler talk is heated! ABSOLUTELY don’t go to the Christmas party…….) Because as you grow, keeping up with inflation, prices for goods/services increases, but as percent return on investment goes DOWN, you can’t give raises to the ever growing STAFF……..Top talent is hard to find because as each new partner buys in, he is GUARANTEED a lower return on his money every year. Ouch! Not to mention that existing partners are resisting growth FOR THE SAME REASON!
I told him I’d be interested to know if his annual statement to partners shows a percent return or percent profit from year to year. And not to think I wouldn’t remember this if we work together on a large project: the larger the project, the smaller the percentage of construction costs for fees.
………..HE WASN’T AMUSED. He told me I was pretty & that he had to get back to the office.
Let me know where my logic failed!