By Elliott Brack
Editor and Publisher, GwinnettForum
JUNE 22, 2021 | Talking with business people throughout Gwinnett, the times are good. The fallout from Covid seriously hurt some companies, but that appears to be over for most. We talked to one Gwinnett businessman, and his words were straight-forward: “Sales are booming!”
While we won’t identify him, let us say that his company serves five southeastern states, with 600 employees. About 250 are in the Metro Atlanta area, and his firm has $620 million in sales. No small-fry.
“We are up 20 percent in sales. Our profit would be up significantly higher, but we are packing a reserve account for a major operating system conversion. Even with that, profits are at record levels. Historically, our best years are when we first recover from a recession. Sales run over our expenses faster than expenses can increase.”
However, one problem has arisen: “Customer service lags because of a personnel shortage. We currently have 25 vacancies. That’s also a new record for us.”
Prices from suppliers have significantly increased after Covid, for a number of reasons. “We have also passed through a record number of price increases. Suppliers that raised prices early in the year are realizing they didn’t go up enough. Usually they try to get ahead of what they expect to happen to their cost over the next 12 months.
“We add a half percent to each increase in our prices for what we call ‘breakage.’ That’s our term for customers that refuse an increase or old quotes we need to honor. The price increases are coming so fast and furious that no one can complain. Even chronic complainers (home builders) are numb and overwhelmed. We just pass through what comes, and don’t attempt to anticipate general price increases.”
What this CEO sees more of today are supply chain interruptions. “They are too numerous to discuss. A consistent flow of goods on a predictable schedule is a relic of the past. The Biden economic plan should fix all this. A tax increase to generate a full-blown recession will reset the table. Those 25 vacancies will become 25 people we don’t have to lay off.”
The only source of revenue is the retail customer. Every penny of taxes is paid by the ultimate consumer.” The businessman recognizes that when earnings are reduced……you have just three options if you want to stay in business:
- Raise prices.
- Cut expenses.
- Increase sales.
“The last option exists mostly on paper. Unless you have tremendous elasticity in your overhead, an increase in sales will increase your expenses. Recovery will require an unrealistic increase in sales. The first two options are the only viable ones. When taxes go up, retained earnings go down. Now you have to react.”
He adds that we hear talk of higher taxes: “They say ‘We are only going to raise taxes on incomes over $400,000.’ That’s the biggest lie since we were told ‘You can keep your doctor under our insurance plan.’ All you have to do is look in the mirror to see the ‘ultimate source of the dollar.’ That’s who ultimately pays every penny of taxes.”
The businessman gave a parting word: “My father told me years ago, ‘Don’t try to change the world. Just figure out how it works, and make it work for you.’ If some force reduces my retained earnings, I fix it. I’m not alone in this. That’s how the world works.”
That’s the way one guy see it in this post-Covid world. Thanks, Mr. Businessman!
- Have a comment? Send to: elliott@brack.net
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