Reply #5: Actually businesses need "profit" not "customers"

[guardian]

If business costs are so high that it can't make money on a customer then more customers won't help. Part of the problem businesses are having now is predicting what costs will be next year. Because of this even if they have the potential of new customers, owners are hesitant to take on any new business that will require hiring more people or buying more capital inventory/equipment.

For example, my Dad owns a small commercial laundry that provides textile rentals. Mostly linens/tablecloths/napkins to restaurants and the little entryway mats to cut down on dust/dirt. He is right on the edge of folding right now. Yes he could use more customers today. But he tells me his biggest worry is what will happen if his costs go up. Most of his customers are saying that they can't afford any price increase in his services. His 3 big concerns are

1. Energy costs. If they go up 30% - 50% - 100% due to Cap & Trade legislation this alone will crush his business. He'll have no choice to but to raise (maybe double prices) and most of his customers will drop his services rather than pay more.

2. Increased taxes. If taxes go up he can't make it without raising prices. Doesn't matter whether the tax is corporate, personal, federal, state, local, or called a "fee." It is still money out of his pocket.

3. Increased payroll or overhead expense to comply with new legislation.

If he folds, then his 9 employees are all out of jobs. He is one of the few employers in this rural area in an already depressed labor market. He pays well above minimum wage (typically $10-$12 hour for unskilled labor). People like to work for him because everyone else in town only pays $7-$8/hr for similar skills. Fortunately, he has saved and can afford to retire (he is 79). The only reason he doesn't close the doors now is that he feels an obligation to provide the employees a job. He is old and not in the best of health. Profits have already dwindled down to the point that there is almost no financial reason for him to keep things going. If things get worse what little profit he makes will turn to a loss, and he'll close the doors and liquidate the equipment.