I normally wouldn’t comment on a situation likeÂ Cindy Fairless Lay’s. Â She is closing her privately owned business here locally, and that’s none of my business. Â However, Ms. Lay wrote a guest column for the KNS (related article) today in which she explains why her business is closing. Â In doing so, she’s put herself out there, presumably to solicit opinion and reaction. Â I happen to have some.
Because the closing of my business is due to (lending) practices of my bank, legal loan-sharking of credit card companies, price gouging by oil companies, two governmental agencies arguing as to whether my cakes with cream cheese frosting can be sold, and a president that suddenly, as if he were innocently surprised, announces our country is headed for the worst economic shakedown since the Great Depression, I cannot remain silent.
Let’s break this down. Â Her business is closing for the following reasons:
- Bank lending practices
- Loan sharking by credit cards companies
- Price gouging by oil companies
- Two government agencies
- President Bush
What? Â The first two reasons lead me to believe this business was highly reliant on debt for operation. Â And that leads me to believe this business would have never even gotten off the ground without debt from banks and credit cards. Â Did Ms. Lay write an article crediting them for her success when the business was thriving? Â Seems fair to me. Â Maybe I’m wrong. Â Maybe this business was started from a pure cash position. Â Maybe.
And I wonder if her business accepted credit cards from customers. Â If so, does that make her complicit in their “loan sharking” practices? Â Or is it only loan sharking when they charge you high interest rates and punitive fees? Â I’m no fan of credit cards–don’t have one. Â But to lay the blame for the failure of your business at their feet while failing to recognize that it was you who agreed to the terms they presented is ridiculous.
Could it be that failure to effectively controlÂ debt leverage contributed to the closing of this business? Â That seems like a management issue to me.
And price gouging by the oil companies? Â If oil companies were gouging and getting away with it, why have gas prices dropped so much recently. Â They’d have to be fools to drop prices if they were getting away with unfair gouging practices.
No one is more irritated by the idiocy of government agencies than me, so I sympathise with Ms. Lay there, but their decision over whether or not a cream cheese frosting can be sold is a major factor in the business failure? Â Really? Â This would make sense if the business were “The Cream Cheese Frosting Company”, but this was a restaurant. Â Was the whole thing riding on the ability to sell cream cheese frosting?
Lastly, this is (obviously) President Bush’s fault. Â I guess that is a given, because everything else seems to be his fault too. Â Look, I’m no fan of Dubya, but I’ll give him this–he has to be the hardest working President in history based on what I’ve heard and read. Â I mean, to be personally responsible for every single problem of every single person in this country is quite a feat. Â Hell, I don’t even have the time to wreak that kind of havok in my own life.
Ms. Lay seems like a nice enough lady. Â She enumerates her virtues as a humanitarian in her article, and she sounds like a nice person to work for and with. Â Apparently her food is really good too. Â But at the end of the day, she has to realize that she took risks and lost. Â She was not forced to take these risks. Â In fact, she’s quite fortunate to live in a place where the opportunity to take these risks is available to her.Â Â I’m not sure what her purpose was in writing this article. Â Maybe she’s looking for a bailout?
13 Replies to “Business Fail Because of Banks and Credit Card Companies? C’mon.”
Because of my wife’s preferences, we go to restaurants for dinner at least twice a week. I’ve seen restaurants thrive and others die on the vine. The reasons have to do with location, quality and variety of food, and quality of service. Everything else takes care of itself for a good restaurant and nothing helps a bad one. If she needs advice on running a good restaurant, she should talk to my wife.
Nice write up sadcox. There is one person responsible for the failure of her business…her. No one forced to her accept loans or credit. I have little sympathy for her. It’s too bad that she has to close her business, but she needs to accept some personal responsibility or things are going to get a lot worse than they already are.
I agree, nice write up, but I have one possible disagreement. I do believe there has been quite a bit of price-gouging somewhere up the pipeline. These people are not stupid. Call me “paranoid” or a “conspiracy nut”, but I do believe they know just when to drop the prices based on decreased sales or whatever studies they use. Hell, it’s not my business, but even I can assess when people have had enough and when traffic flow decreases on the roads and when the environment is totally frustrated and starting to adapt to their situation and cut back on driving and start car-pooling… as soon as these things start to happen, drop the prices and raise morale. Woo hoo!…things are good again and I can fill up my tank (even though gas is still ridiculously over priced..)it’s all in the perception of the consumer. They are just applying basic marketing principles. I wonder if they use the MBTI to evaluate the market….hmmmm.
I can’t agree more with your analysis.
do believe they know just when to drop the prices based on decreased sales or whatever studies they use. Hell, itâ€™s not my business, but even I can assess when people have had enough and when traffic flow decreases on the roads and when the environment is totally frustrated and starting to adapt to their situation and cut back on driving and start car-poolingâ€¦ as soon as these things start to happen, drop the prices and raise morale.
Don’t look now, but you just accurately described exactly how supply and demand works.
3 quarters of Econ 1010 learnt me gud!
So you agree that there is no price gouging, only suppliers and consumers reacting to one another and achieving a balance in the form of a price consumers are willing to pay for a product suppliers are selling?
only if you agree that selling bottled water at $5/gal. after a major disaster is not price gouging. In that case, it’s just capitalism as its best…
I’ll play along…
If there is only one supplier of water or collusion amongst suppliers to fix the price, then yes, that fits the definition of gouging.
But then that’s a different conversation that the one we’re having here, isn’t it?
My point is that the behavior that you yourself observed (decreased demand due to price, drop of price due to decreased demand) demonstrates that this was not an example of gouging.
yes, to the latter, the decreased demand due to increased price, lead to price decrease, but that was after the fact of…increased demand due to decreased supply that the oil companies/refineries created in the first place when they chose to cut back on supply by reducing the amount of gas produced/refined, which happened to be right before the hurricane that supposedly did the damage. therefore they self imposed low supply in order to drive up demand and cost. it’s not like we have not been through this before…i dont recall actually disagreeing with the laws of supply and demand, i just disagree that that is not an issue. Big oil refineries (major political party contributors) playing games with supply and demand and no gov’t oversight that i’m aware of…that does affect small businesses…both parties guilty one way or the other, and i’m not smart enough to know what the solution is…
Nice work sadcox. completely agree with you review. The only for your downfall of your business is yourself. Considering Cindy she is the one who led to the downfall of her business. You cant blame anyone else. nice article. Cheers
That’s not fair. Not fair at all. You can never blame anyone else if you have failed yourself first. Its not correct at all. And Cindy needs to understand that. either the easy or hard way. Nice write-up sadcox. An interesting read.
I totally agree with you. It’s true that the present economic crisis is affecting all kinds of businesses. But if she thought a little bit more about her future this wouldn’t have happened. Now she’s blaming everyone else for her business failures. It’s very good that you posted this story. It’s a good lesson for all of us.
Interesting review. And yup, agree with you and the comments. Its not the banks and credit card companies. It’s a financial policies that brought her down. And blaming banks and credit card companies is totally not acceptable. If she wants to get back up she should fight back and stand back up. without crying over spillt milk.
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