When looking at true cost economics, it’s obvious that people don’t take everything into consideration most of the time. This is a mistake that can cost a small business owner time, money and other resources. Sadly, this is often ignored by busy entrepreneurs who simply don’t care about others. When looking solely at the bottom line, one can end up in trouble. With this in mind, one must understand true cost economics. Simply put, this is a model that includes the negative costs of doing business, such as environmental, political and human factors. Here are three ways it can hurt your business and three ways that it can help you.
Positives:
Marketing opportunities: Now, more than ever, people of all ages are more conscious with their buying decisions. Think about it, people will frequently buy vegan products or a shoe manufactured in their home country. Not only that, plenty of people also look for products created by a person who receives a livable wage. So, if you can take advantage of this, your business can increase as people will take the time to look at your product more deeply.
Tax breaks: Without a doubt, if you are socially conscious and treat your employees and the environment well, you can enjoy plenty of tax breaks. In the long run, a corporation will save money if it takes the time to treat people and the environment well. However, in the long run, this is costlier for most businesses.
Long haul: In the long run, an entrepreneur needs to consider the opportunity costs. When doing so, it’s easy to see the big picture and set up things in an intelligent and beneficial matter. Remember, when considering the human factor, a corporation will stick around for a long time.
Negatives:
Bad publicity: When a company creates a product that harms people or the environment, it will receive bad publicity. In the long run, this will hurt he profits of the corporation. While hard to avoid, one can employ a PR representative who can help the company bolster its image. Of course, in reality, this is part of doing business, and it’s not easy to avoid bad public relations issues in the future.
Profits: Without a doubt, when harming the world or causing other unseen issues, a company will hurt its profits greatly. Not only will the corporation need to charge higher prices, but it will deal with liberal politicians and governments. Sadly, this will hurt the profits of a corporation. At the same time, consumers will pay more for products and services.
Time: Finally, when dealing with unintended consequences, a company will spend plenty of time. This is true whether the employees need to head to court or take care of other issues. Since this is largely unavoidable, most corporations simply factor this into their forecasts. Remember, when a company is large enough, it’s hard to avoid this time-consuming issue. Fortunately, most consumers realize this and have no problem spending the extra money on a product or service that changes their life.
When running a business, large or small, one needs to consider the true cost. When doing so, not only will a corporation save time and money, but it can understand the market and its future opportunities better.