Something occurred to me the other day while I was talking to a colleague about business. We were discussing services and how certain customers were difficult to deal with. In service industries, customers are bread and butter. But not all customers are awesome and pretty much everyone has a “karen” story nowadays. HOWEVER, there is a big difference in the “demand” of services. I should say “LEVERAGE” but that’s used for different meanings too.
A while back, I deduced (not publicly but personally) that the switch to cheaper manufacturing would lead to a rise in the drop-shipping, China-mostly production of products we see today. A LOT of stuff is made there. It’s even made with slave labor (ugyhurs). You can’t beat the production value, even with shipping and logistics that cheap labor provides from foreign countries. India makes furniture, China makes electronics, etc. You have a hard time competing with Wish, Alibaba, Aliexpress, and pretty much all the other stores on Shopify. You CAN beat them by ordering in bulk, but that takes a ton of cash upfront and a secure feeling knowing that what you purchase has demand or will keep it’s value over the time it takes to market and sell it.
But one industry won’t lose value and that’s service, right? Weeeeellllllll……sort of.
It’s actually similar to the slave labor model I described above. If it’s not specialized labor, the value and the demand of the labor are cheaper. This was actually an expensive lesson for me to learn due to a business I started. This may or may not sound obvious to you, but I assumed that labor in general was in demand. It IS, but the payment for that demand is still based on the specialization of the labor. It doesn’t even matter if the labor HAS restrictions on it, because the capitalistic market works around those restrictions.
Case in point: Someone who moves boxes is in demand, but never in demand such as a plumber, and especially a plumber in the middle of the night or an emergency. Now, again, that seems obvious. But let’s take another service industry. Say, Wedding photography, since I do that/have done that too. You might think that that industry is a demand industry, but you’d be wrong. A demand industry is one that people CANNOT live without. People can live without a wedding photographer, and will actively seek discounts, half payments, you name it. I know because I’ve done this and I’ve seen people do it to me first hand. The lack of respect on some jobs is real. Now, not all are like this of course, and it makes up a small portion of the service industry, but it’s there. But again, an emergency plumber in the middle of the night gets paid, and gets paid in spades because whether or not you respect them, you NEED that service. Therefore the service demand is on the side of the plumber. It would work the same with electricians, inspectors, etc. Those functioning services have the demand on their side, so therefore they have more leverage than the services industries that have the demand on the customers side-deliveries, stocking, arts, etc. A service that you can live without does not have the demand on its side, no matter how strong the contract is.
So, if you’re operating in a business that is a service that has “demand” on your side, then great. Your job is a little bit easier because you can control that aspect of service and it should be relatively safe. Unfortunately those businesses are less exciting than the “arts” like photography and other services that don’t require that “demand” will have to resort to marketing and advertising to make sure that their service is a relevant product to create that demand. They are more exciting however, so while you have more risk you can have more reward.
What’s more American than that?