Why big business and the banks are parasites on society

Assume you are a plumber, a good plumber. You do a good job and charge a fair price and your customer service is excellent. You do minimal advertising, an advert in the Yellow Pages and some leaflets around the local area.

Work increases gradually until you are turning away work you can’t fit in. You have three options: -

1. Carry on and be contented that you have full employment.
2. Increase your prices to control the demand and improve your income.
3. Employ someone to do the extra work.

Let’s assume that you take option 2 and increase you prices a little. Assuming you are still doing a good job and customer service is excellent there is no reason that most of your customers will not keep coming back. Some of the smaller less profitable jobs may disappear but these could easily be replaced to larger more profitable jobs and provided all else was equal the demand could soon outstrip supply again.

Let’s assume that at some point you employ someone. You could pay them what you used to charge and keep the price increases as your commission. This would probably be over generous as you would have to keep the books, deal with customer issues, pay tax and national insurance etc. However, you now have someone working for you and are able to take on more work. Increase your income and maybe get a bigger discount from suppliers.

Assuming all goes well and demand increases to outstrip supply again. You recruit another plumber, then another and another. At some stage these employees are going to need more management time that prevents you from being a plumber. Your suppliers need managing to get the best deals customer services in not the customers calling your mobile. Now you have two options:-

1. Carry on being a plumber and employ someone to manage the back office for you
2. Employ another field plumber so you can manage the back office

The danger with option 1 is that your back office person sees how to run the business employing plumbers and decides to set up on his own and steals all your customers and some of your employees. Not only are they in competition they have also set your business back as you seek to replace them the employees and the customers.

The danger with option 2 is that you are now doing a job you are not necessarily the best at doing and could easily get swamped by the day to day running of your organisation or fail to make the best of it.

Let’s assume you go for option 2 and as you expand you bring in someone to do the books, then someone to look after the customer service while you continue to look after the “lads”. Eventually you structure the team so there a regional team leaders able to get to jobs and support the lads in the field that come across problems.

By now you have around 50 plumbers in the field the over demand is not a problem anymore and the problem is to keep a steady flow of work in between the winter peak and the summer lull. So now you employ a sales man to try and win some company maintenance contracts. He needs some marketing blurb and a rate card and some introductory offers – entre a marketing person. As your company moves more towards the highly lucrative contacts with enterprises, councils and housing trusts you company is less and less like the jobbing plumber it started.

Winning large contracts becomes the focus and having the right sales people is the key to success in negotiating these large deals. The right sales person demands a high salary and a heft bonus.

What would your company do if best sales person left? Could it survive?

What would your company do if the best plumber left? Recruit a trainee?

What has happened? The company that started off selling plumbing services is now held to ransom by a small elite group of sales people that defend themselves by instilling fear of losing them. The core people that create the wealth, the plumbers, are less important.

The sales people have become the go-between. They bring the plumbing skills and the customer together. They add no value. The customer is buying the plumbing skill.

Bankers don’t create anything, let alone wealth. The simply bring savers and borrowers together. Unlike sales the bankers have the added luxury that the savers and borrowers don’t know each other. This enables the bankers to charge even higher commissions and means that replacing them would be more of a struggle at first.