Blogs

Any business looks wonderful in a bumper year. The more useful question is what its owners do with the extra money: strengthen the business, or stretch it, so that a normal year becomes a hard one.

Two pickle makers can report the same sales and the same profit, and still be very different businesses. The difference is who is standing at the counter: whether the customers can pay, pay on time, come back, and stay for reasons beyond the lowest price.

Two milk rounds, the same milk, the same price, the same forty customers. One earns a living and the other loses money. The difference is route density, and it explains how a lunch-box network, a courier giant and a retail chain keep their costs low.

A simple question separates a strong business from one that only looks strong: if a rich rival tried to copy it tomorrow, what could the money not purchase? A sweet shop, a cola and a milk cooperative show how to ask it.