The USA inflation rate came in at 5% ending May 2021.
We hadn’t seen inflation jump that high since the period June-August of 2008.
For you 50+ old dudes like me…
Can you remember what happened in our economy in the fall of 2008?
That’s when the GREAT RECESSION began (for you young folks. 🙂
I’m not here to preach doom and gloom.
I have NO IDEA what the economy will look like in the coming months…
But 34 years as a small business owner has taught me a few lessons.
You see…experience is earned as you live, practice and learn.
Let me share one little secret.
It’s sort of a long-standing personal best practice.
Something that I know works well for me.
I love reading about successful companies…
and even more about successful people.
Anyone can shorten their learning curve by learning from OTHER PEOPLE’S MISTAKES (OPM)…
or OTHER PEOPLE’S EXPERIENCES (OPE)!
Here’s the story:
When I was doing some research on Southwest airlines, I found this
amazing interview with Herb Kelleher, founder & CEO of Southwest Airlines.
Herb was being interviewed over at the Wharton School of Business. This is a classic example of how an extremely capital intensive business with HIGH employee costs can still figure ways to lower their costs…and win in business.
You can read the article or listen to the full interview by clicking on the link below. http://knowledge.wharton.upenn.edu/article/what-makes-southwest-airlines-fly/
I’ll summarize three killer points from this interview in case you’d like
to follow Herb’s advice (without reading or listening).
To create a culture of LOW-COST, the CEO had a policy that HE would approve EVERY expenditure over $1000.
Think about that.
In the interview, Herb admits that many times he did not have time to really
review EVERY single $1000 purchase…but he created the APPEARANCE that he was watching every single item by SPOT CHECKING the list of expenditures.
He made it a BIG deal to be careful spending money!
To keep his training cost low, they only purchase Boeing 737 airplanes. This way, they only had one training system for pilots, mechanics and crew.
Think about how this applies in your company with all the equipment you buy. (Hint – hint…how many colors of power equipment are on your trucks?)
Third (and this is HUGE).
Herb says that even during good times, he remembers the BAD TIMES (he recounts economic problems TWICE a decade for 3 decades) and makes a commitment to keep costs low.
Although they pay their employees LESS than any other airline, they treat their employees well with a profit sharing plan. And even though his airline is one of the most unionized of them all, their employees like working there because of the culture they have created.
Pay ain’t everything my friend!
How can you lower your cost? Paying less in every area is certainly possible!
Which brings me back to what I’ve been talking about the past few months.
If you are complaining about what it costs to find, recruit and hire employees…perhaps you need to consider a new strategy.
After seeing our wage rates grow by a whopping 10% between 2019 and 2020…
I knew we needed a new hiring strategy.
And that sneaky COVERT-19 showed up just in time to help us make a transition.
We got really serious about hiring…TEENAGERS.
We pay them a lot less than people with “experience”.
This is helping us keep our number one cost (labor) under control in 2021.
You can learn the details and how we have communicated with young people by watching this video: https://superlawntrucks.com/internships/
We’ve gotten a steady stream of doubters, skeptics and non-believers sharing their personal concerns about this strategy with me the past few weeks. (And I appreciate the feedback).
stick with me.
We will be talking more about this overlooked people strategy as inflation kicks us all in the teeth!
Take it from me…
If you don’t trust my insight from 34 years of making payroll and building multi-million dollar companies…
Take it from Herb…
He had a lot of experience and a lot of capital at risk when he was interviewed a few years back.
What do you think he would have done at Southwest had he been alive to deal with Covert-19?
Keep working on it! Your future is bright!
Tony Bass, founder
PS – If you would like to learn more about keeping your company growing and your people costs low…
then send me an email to email@example.com and put – “LOW COST” in the subject line.
I’ll send over details about the WEBINAR TRAINING on this subject…