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Chris LoCurto

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March 15, 2011

Does My Bottom Line Look Fat?

March 15, 2011 | By | 2 Comments">2 Comments

When I was 15, I worked at Mountain Mike’s Pizza in my hometown of Truckee, California. It was a great restaurant that was always rockin’, and we were always slammed.

The reason? We made a killer pizza! Everything that went into the pizza was fresh. Every day we grated cheese, cut vegetables, and sliced meats. We even made the dough every day. The best part? We used an actual pizza oven! We didn’t use a conveyor belt that made a pie in five minutes. When you ordered, you knew it would take up to 20 minutes, but you were getting a real, old fashioned, full-of-flavor pizza. Not a piece of cardboard with some rubbery meat on top.

Because of the fresh ingredients and the time it took to make the pies, Mountain Mike’s pizza cost more than the fast pizza company in town. And while we delivered, we couldn’t guarantee that it would be there in 30 minutes. There’s an old saying: “You can have good, fast or cheap – pick two!” In my opinion, the other company chose fast and cheap, but there was no doubt that our pie was better. Over time, they won out on the mass scale.

Interestingly enough, the fast pizza company is now struggling to get repeat customers due to their product’s lack of taste. Over time, they continued to cut costs with cheaper products in an attempt to get more margin and more market share. While that worked for quite a few years, it’s now backfiring on them, forcing them to spend money to make a better pie. They’re spending tons of money marketing the fact that they took their product to a point where fast and cheap wasn’t enough to satisfy the customer, and now they have to fix it. Eventually, even on a mass scale, quality matters.

You might have recently seen a fast-food chicken restaurant running commercials apologizing for its lack of a quality product. Now there are claims that some fast-food places use almost no actual meat in their meat products. For one company after another, lack of quality is starting to make a difference.

This is an easy trap for a small business owner to fall into as well. If your focus is solely on the bottom line, it isn’t difficult to find ways to make it bigger. If it means cutting more than just expenses, though, you have a problem. If it means cutting quality, you’re going to lose in the long run.

So am I saying you can’t cut expenses? Not at all! Once you have a product that is selling, and you see that people like it, do all the research you can to see where you can cut expenses while delivering the same or better quality. There’s nothing wrong with doing everything you can to grow your bottom line. The issue is when you stop producing the thing you produce in the way that brought your customers to you. You must make a profit, but make it while making others happy.

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