just a thought – more profit for less
For the first time since it was launched ten years ago, The National Post, one of Canada’s two national newspapers, turned a profit. I was a bit taken aback when I read this. Somehow, I thought that a big venture like a national newspaper is big because it is profitable. Also, after hearing so much doom and gloom from the media, I had the erroneous assumption that all newspapers are doing worse, not better. The way the paper achieved profitability? They sold less newspapers.
Mr. Asper said the paper significantly cut costs in its 2009 first quarter by “pulling out of markets where it was not profitable to print smaller numbers of newspapers.”
The National Post pulled its print edition out of Manitoba and Saskatchewan last October as part of an effort to focus circulation on such larger markets as Toronto and Vancouver.
That, combined with gains in online advertising revenue, helped haul the paper out of the red.
This reminded me of part of Carolyn’s interview with Rosemarie Umetsu.
A couple years ago, Rosemarie was a fashion designer with a few seasons under her belt. Her wholesale business had over 30 accounts with high-end boutiques across North America and Europe, which is excellent progress for a new label. Yet, she struggled to keep her business going; managing many small customers, fabric suppliers and contracters is a lot of work relative to the size of their orders. It takes so much effort to sustain the business that building momentum to reach the next level takes superhuman stamina, luck, and access to capital.
Rosemarie was at a point where she had to reassess where she wanted her business to go – and she chose to move from wholesaling to retail. She created an intimate atelier, gathered a very select clientele of other creative women, limited the production of each style to just four units, produced under the same roof as her showroom. Now she gets more control over her product, interacts directly with the amazing women who wear her clothing, and is sustaining a business that gives her the life of a fashion designer.
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While there are so many differences in these two stories, it struck me that fashion designers like Umetsu and media moguls like Asper have something in common.
Once upon a time (the 1980s) fashion designers made money like gangbusters; so did the newspaper men (somewhat earlier in that century). That was then. Now popular opinion of either business is clouded by decades of spin and glamour. The reality is that in either one of these very mature, very saturated industries, it is no longer possible to make ridiculous amounts of money.
Anyone who is harcore enough to launch newspaper, a magazine, or a designer clothing line now, and stick with it whether it is profitable or not, is doing it for intangible reasons. Some are about power, reputation and status, other reasons are to serve people, to create beauty, to inform, or to broadcast opinion. They do it because they want the career.
They can be profitable businesses despite it all, but sometimes the answer is to manufacture and sell less. To serve fewer people, better. The world needs newspapers and fashion designers, even if they are more localized than before – in fact, people may prefer them that way.
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So what do you think? Does it make sense to grow a business by making it smaller? Does bigger always equal more successful? Have another example? Discuss, dissert or discredit me now in the comments.
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My friends are always asking me why I stopped working for fashion magazines to write for free instead. I decided that I was tired of making money for other people who would never return the favour. I downsized my role in the industry to rebuild my stature in the industry. Maybe it’s working, or maybe it’s not. Either way, I’m a lot happier and I’m out of debt, so it’s not a bad thing.
Any chance of an link back to last week’s post? Or a summary of last week’s concensus? (Yeah, I’m just being a bit lazy!)
I’m really enjoying this ‘just a thought’ series … only, can’t think of any insights to contribute at the moment …
One thing I’ve learned over the past year of running Savillian is that you can’t be everything to everybody. You have to focus yourself on a niche market. Mind you, half the battle is figuring out what that niche market is and then seeing if you can make money out of it. I am still trying to figure that out!
Auntie Fashion – gawsh I wish I could pay off my debts by working for free. What’s your secret?
Ginevra – perhaps I will have an introductory paragraph on these posts for the lazy in the future. Glad you’re liking them!
Jas – we’re all trying to figure it out – hence, just a thought.
BONUS LINK – Comrags on balancing entrepreneurship and life, via Nathalie Atkinson – http://network.nationalpost.com/np/blogs/theampersand/archive/2008/03/20/l-oreal-fashion-week-comrags.aspx
not related to the post – I just noticed the link back to me. :) thanks so much for the love!
[...] As they say, “if a newspaper can turn a profit …” (via Finalfashion) [...]
I think many people look at a newspaper as a service rather than a business, where the primary goal is to disseminate information rather turn a profit. I guess now that the internet really takes care of the information part, newspapers need to rethink their purpose. Great post, lots for me to think about. thanks!
In general, I think the wave of the future is a low-overhead business model, with microenterprises using spare capacity of capital goods ordinary people own anyway. With little or no overhead, it’s possible to ride out slow periods. It’s also possible to gradually ease into a business, using it to supplement income from the day job or gradually shift a few hours at a time from wage labor to self-employment, with no significant risk.
To run a brew pub out of my house, for example, using my ordinary kitchen oven and refrigerator, would require only a small bank loan to remodel a spare room for seating and buy a brewing kettle and a few fermenting tanks for the basement. Such a small loan, at most a few thousand $$, could be serviced with the margin from a few customers a week.
One effect of most regulation and licensing regimes is to impose mandatory minimum capital outlays, so that it becomes imperative to do business on a large scale and produce in large batches; one must either make the business a full-time project, or not do it at all, and the failure rate becomes enormous.
My brew pub example above would be highly illegal, because of “safety” regulations that mandate an industrial-sized oven, dishwasher, freezer, etc. To amortize that kind of capital outlay, I’d have to hire professional kitchen and wait staff and keep a large dining area filled up.
That’s the effect of the CPSIA’s mandate of testing each separate product line at enormous expense. It effectively mandates large batch production and push distribution, because you can’t switch between a large number of different product lines on a just-in-time basis when each product line requires an enormous capital outlay.
Take examples like unlicensed cab services using a car and cell phone versus “authorized” cab services with $300,000 medallions, and a thousand more, and you get the picture. The government criminalizes the informal and household economy, and makes us artificially dependent on wage labor.
[...] the “more with less” theme, Nathalie offers up some interesting questions with the designers of [...]
The idea of treating your customers like employees is explained fairly well by the book Value Profit Chain.
Many business use that model, because, like someone else said above me, if you try to be everything for everything, you are setting yourself and your customers up for failure.
Learning to say no to certain customers is a wonderful relief.