The no greed paradox
You would imagine greed and making money go hand in hand right? Well I’m going to propose a principal to you today that contradicts that. I call this the no greed paradox. This is the idea that not being greedy is in fact more likely to yield healthy, stable income.
Let’s define greed first, according to Merriam Webster greed is:
A selfish and excessive desire for more of something (such as money) than is needed.
A perfect example of a company that avoids greed is Chick-Fil-A, the number three restaurant chain in the USA as 2019. Chick-fil-a is remarkably generous with its franchisees. The charge is a nominal $10,000 fee per franchise, almost unheard of in the restaurant franchise industry. More than that they buy the property, build on the property, provide the equipment, training and various other necessities. Compare that to other franchises that charge 40,000 dollars plus for a franchise, and don’t provide anywhere near the same benefits.
Chick-Fil-A franchisees keep 50% of revenue and pay 15% of
net profit to Chick-Fil-A.
They also very generous with staff paying for college bursaries and keeping them generally happier than rival chains. The staff are renowned for their happiness, research showing smile rates well above the industry norm.
I could go on and on but you get the picture. Chick-fil-A is the opposite of your typical American corporate. What is the end result of all this generosity? Chick-Fil-A locations have revenues well above those of the competitors; in the region of $4 million per location. Not even McDonald’s or KFC can keep up.
In terms of
system-wide sales, Chick-fil-A is now the third largest in the
United States. The competitors’ response to this rise is revealing. Instead of
recognising fundamental ethical and cultural differences they choose to respond
by focusing on the trivial. For example McDonald’s franchisees sent a letter to
McDonald’s headquarters demanding the addition of a chicken sandwich to the
menu; as though that’s the real concern.
The same principles can be applied to your personal finances and your own business interests. Customers and other stakeholders are interconnected with your business if they get burned you get burned. Fairness never goes out of fashion.
So how can you avoid greed? Well first of all you have to identify it every time it raises its ugly head (and it can creep up on you when you aren’t reflecting enough on your motives and intentions when making decisions). Note the “more than is needed” bit, in the Merriam Webster definition of greed. That’s the red flag that greed is present. So to ensure you avoid greed you’ll need to define what is actually needed.
A great way to do this, is budgeting. Budgeting is an effective way to define what you actually need.
While you are budgeting watch out for the following things in particular that tend to relate to ego;
- The Joneses. What other people buy isn’t a good indicator of what you should buy. Sometimes it pays to have a bit of humility, and it certainly won’t hurt your pocket.
- Buy clothes in keeping with your income – most people can’t tell the difference – and brand names are often poor value. I once bought an expensive Pringle jersey which felt rather flimsy from the outset, and sure enough a week or two later the cuff was unravelling. The clothing items where you’ll notice the impact of price the most are shoes and belts. Synthetic leather shoes and belts just don’t last. In fact poor quality, bonded leathers don’t fair much better. Rather buy a few decent pairs of leather shoes and genuine leather belts, they last far longer, long enough for it to make more financial sense than buying poor quality ‘pleather’ or fabric shoes, or vinyl / PU belts.
- Buy used cars. Again most people won’t even notice or care if your car is a bit older. If you’re really concerned about this, buy something that is a bit ‘unpopular’, since most people won’t be familiar with what the latest and greatest models from that brand are. Cars between one and four years represent the sweet spot in terms of value, since they’ve had most of the depreciation already.
For more budgeting tips, see the other articles in this section of the site.