The Cost of Doing Business
Did you see the post roaring around Facebook about the cost of running a restaurant and why the patron should not expect her hot water and lemon for free? ( She didn’t have a clue about the cost of doing business.)
It was priceless. ‘Cafe Owner Leaves Brilliant Response‘ Having worked in Food and Beverage for years, I could really relate.
It brings to mind something that happens more and more lately — small businesses being asked to devalue their business by not charging tax, or by customers prefacing their comments with ‘Well, its a small job I could actually do myself. (Implied: “If I had the tools.. time.. machine.. space…expertise, knowledge of where to get materials, accounts to get materials etc. etc.. “) so it shouldn’t take more than a few minutes.”
This column is about design dilemmas, and this is a dilemma for all of us who run home-based businesses. I know. I network. I hear it a lot.
Let me give you an example. I am often told that custom drapery is far too expensive. It can be expensive, sure, but here is how it works: I buy the rods, for you. I buy the fabric, for you. And the lining. I will construct the drapes to your exact specifications, and install them too. I will use my years of experience and training to help you make an informed decision and then I’ll make the product myself and make it the best it can be. I have insurance on my workroom so if I damage your fabric, we are covered. I have installers insurance (which costs more than my home AND business insurance combined) so if I damage your property we are covered. I have the tools, and the vehicle — with business insurance on it, too.
In my workroom I have four industrial sewing machines. The are not inexpensive, believe me. When I turn them on, my electricity bill skyrockets.
I know how much it costs to run my workroom for an hour. If it takes two hours to do a job, just like a ‘real’ business, I have to add my operation costs to the product cost. I pay myself a living wage and it’s a lot less than you would expect. I know. I network.
When I sell you a product, I have to post that sale in my books. And I have to submit the GST and PST on that sale. If you want me not to charge the PST, I have to fudge my books and not declare the sale — which, incidentally, is illegal — or reduce the sale price so I can pay the tax out of that — which means I get paid less for doing the job. I can only add, “Would you ask the cashier at Rona to take the tax off if you paid cash?”
This is a rather difficult subject to broach with customers; but after talking to a few colleagues who also run home-based businesses, I said I’d take one for the team and write a column about it. Thank you for your understanding and continued support.