For over forty years, I've been one of the most passionate believers in entrepreneurs. From day one, I've learned that too many small businesses are predicated on business models that the owner barely understands and then, those same men and women are baffled when their business dreams are overwhelmed with struggles they never foresaw.
Flash forward four decades and now, instead of simply having trouble formulating a business plan, those same owners are confronted by computers, digital marketing, and social media.
This really hits home for me with the conversations now being had about raising the minimum wage to $15. Do I have an opinion on that subject? Of course. Is it pertinent to this conversation?
What I do know is that the businesses that are truly going to be affected by a $15 minimum wage are franchises and retail establishments - the McDonalds, coffee shops, and boutiques scattered all over the United States and helmed by a small business owner with a vision. He or she is going to be faced with the very real problem of costs and how to reconcile those costs against the bottom line.
Now, the reactionary owner - and one who has never spent time to build systems into the business - will respond to a $15 minimum wage by simply cutting staff numbers and expecting each employee to be more productive. They will fight to utilize their old business model that cannot work in an environment that cannot support it.
They'll fight, they'll struggle, and ultimately, they will do one of two things - adapt or fail.
Anyone who has read one of my books knows that I see this not as a cataclysmic challenge, but a call to make a few tweaks to an existing system. Surely there may be some excess in the staffing that needs to be addressed, but if you have truly systemized your business - in other words, put it to the test of The E-Myth and the Dreaming Room - then you can see that this is an ideal opportunity to ask for more from your staff and do one critical thing:
Give your customer a more outstanding experience.
In the fast food world, the $15 minimum wage is currently being greeted not by lower staffing levels, but actually higher. Companies like McDonalds and even Panera have rethought the customer experience and in so doing, they have more workers on the clock at any given time than they did prior to wage increases.
These companies have changed the speed of the customer experience, rethought the ordering process, and repurposed the jobs that employees formerly did to create a new paradigm for how they can be successful at business even when faced with some of the highest potential labor costs in their history.
Remember, McDonalds was designed to utilize a system that employed unskilled workers at a low minimum wage to create - and recreate - the same customer experience no matter where you bought your burger.
It seems counter intuitive to think that it could survive $15/hour labor costs, but by having a system and then taking the steps to modify that system as necessary, guess what?
McDonalds and thousands of other companies are taking higher wages in stride.
The customer may now order from an app or a kiosk in the store and may not deal directly with a traditional cash register and attendant, but they can still order from the menu they have come to know, they still swipe a card, and they still get what they were looking for - food that is delivered quickly and tastes the way they have come to expect. An additional benefit of the higher minimum wage is this - staff members have the ability to spend more time keeping the dining areas clean and interfacing with the customers.
So the big question isn't "will a minimum wage increase kill your business" but "why would a $15 minimum wage kill your business?"