Sunday, January 31, 2010
Before I went to work for The Scooter Store, I ran carwashes during the day and taught college courses at night. One of my favorite topics was the concept of the self-checkout aisle at The Home Depot. Tonight on the Children with Diabetes forums someone was complaining about the lack of service available on the floor at The HD. My theory is that the drop in business from the profitable contractor's business is causing cuts on the less-profitable sales floors. But then I thought for a moment about it. I've never been a fan of self-checkout at home improvement stores. By definition, these stores are for schlubs like me that are trying to do stuff ourselves; the last thing I need is the stress of trying to scan a 10mm hex nut with no barcode.
But I digress.
You see, the problem is that people need accountability. People are imperfect creatures, and we simply must be held accountable to someone or something. If you think about it for a moment, who exactly holds the kid in lumber accountable if he brushes off a customer? Is it the computer that helpfully reminds you to put that 6 foot picket on the scale so it can be weighed? In business, virtually every business has one chance to get a customer's feedback and either build on a positive experience or salvage a poor one.
That no longer exists at places with self-checkout lanes. If you were the 19 year old making $8 per hour, and you knew no one was going to ask that lady you just blew off if her experience was a good one, would you go the extra mile? Conversely, if you knew you wouldn't be recognized for extraordinary customer service, would you bother? For sure, some would. But most won't.
So let's pretend that Lowe's will save $20 million this year by eliminating 6 full-time cashier positions in each of its stores across the country. Somewhere some operations executive is very proud of that number; and I would also bet that a sales executive in that same company is scratching his or her head as to why their consumer business is suddenly flat or dropping. The reason is that what made the home improvement business such a raging success will now be the reason they fail.
I happen to think this is a perfect example of why the free market shouldn't be tampered with. There are lots of people opposed to "big box" retailers and their impact on "mom and pop" businesses. Sooner or later, the market will correct itself, and my suspicion is that the mom and pop hardware store will make a raging comeback as a result of the self-check lanes. I'll be interested to see if anyone notices it happening.
Sunday, January 17, 2010
Primarily we get the San Antonio news here, and the television news always includes one of each of the following topics: a fire, a stabbing, and a robbery. Generally, whomever can get all three in the lead story will win "sweeps."
"A fire breaks out at a local bar after a man stabs his friend who had just robbed their mutual ex-wife." This is usually followed by an ill-prepared reporter with hundreds upon hundreds of emergency vehicles behind them. I think that robbers actually start fires in San Antonio because they know EVERY cop in town will be at the fire. Maybe the want to be on TV. You can practically hear the director whispering in the reporter's earpiece "OK, you're doing great. Now see if you can squeeze the phrase 'sex offender' somewhere in the story."
The young reporter, hoping to move to the big leagues, thus offers the viewing public:
"That's right Dan, behind me you can see that the entire city is awash in flames. Police suspect that a sex offender robbed a veteran just home from Afghanistan and started a fire hoping it would distract the police. Police have been unable to locate a suspect, presumably because they are all here looking at the fire."
Director: "Don't say that part."
Reporter: "Oh....uh...LOOK! They got him, right over there by the burning strip club."
The newspaper is actually a little better. I'm more interested in the subtleties of newspapers. And since I'm just naturally inquisitive, I'm prompted to offer these observations and/or questions.
- Whoever decided to attach the eyeglasses ads to the funnies should be shot.
- Are trucks ever NOT on sale?
- I hadn't read "Parade" magazine in a long time, and boy have I missed newsy nuggets like "studies suggest a link between going to Wal-Mart on Sunday nights and complete stupidity." I used to think Marilyn vos Savont was a genius, now I think she's Milton with Wikipedia.
- I get that there isn't really a sole pro football team here, but one page out of 40 devoted to the NFL playoffs compared to 27 for the Spurs' loss last night seems a bit....confused.
- Does Academy actually sell any sporting goods, or just $100 shoes and $40 t-shirts?
- I love the Target ad. I always read them, and become disproportionately excited by them. "Look honey, Target has loofahs on sale! 3 for $7.99!" If I saw that ad for Dollar General, this would be a completely different blog.
- I also always look at the office supply ads and the Radio Shack ads. I guess I like to look at out-dated, over-priced technology and then label and file it.
- When you think about it, $1.50 for the paper is a pretty good deal. It takes an hour to read "People," and it costs $4.95. Or so I hear.
- Newspapers would be much, much more popular if they were the same size as a magazine. Airplanes should be a newspaper publisher's best friend, instead they go together like cookies and Calista Flockhart.
- I don't really have a #10, but I'm a fan of the metric system.
Tuesday, January 12, 2010
- Medical Insurance: $800 per month. Why is this so significant, you ask? Everyone needs insurance don't they? Not necessarily. Let's pretend for a moment that I am a healthy adult with an otherwise healthy family. $800 per month works out to $9600 per year. If I were healthy, I might have chosen a bargain plan at work at a cost of $4000 per year, or I might have chosen a major medical plan for as little as $40 per month ($480 per year). Then I would pay out of pocket for office visits (assuming I even went if I were healthy) and prescriptions. I've learned that you can negotiate a pretty decent cash price, and I figure a family of four paying out of pocket would spend $600 per year in office visits. Prescriptions would be pretty typical, antibiotics and such, and would run another $1000 or so to estimate on the high end. So, very roughly, diabetes costs us $7200 per year.
- Life Insurance: $58 per month. I was lucky (and smart) enough to grab a life insurance plan while I could. If I weren't diabetic, I would just use the group life provided at work and buy the increments there. That's $700 per year.
- Right now, I put $5000 per year into our HSA account. If I were healthy, I would probably do it anyway to balance the risk of having a major-medical plan, so that's a wash.
- We spend $1440 per year on mine and Emma's pumps. That's just the pumps.
- Pump supplies are nil (thank you A Plus), but batteries, Tegaderm, etc. are not. I put their cost at $300 per year.
- Most of our diabetes prescriptions are covered at 100%, but insulin is not. $240 per year.
- Office visits...yikes. Specialist visits are $50 a pop, and between Emma and me, that's $1000 per year.
- Hospitals, labs, etc. $2000 per year.
So that's a pretty rough estimate, but it costs my family $12,880 more per year than it could potentially cost.
If you talk about the word "profit" with an accountant and a finance analyst, you'll get two very different answers as to what defines "profit." To an accountant, if your revenues exceed your costs, then you're profitable. To a financial analyst, profit only exists if the revenue you receive is the highest revenue possible AND it exceeds your costs. In other words, if I earned $500 making calculators, and it cost me $300, then an accountant calls that profit. If I could have made remote controls for $300, and sold them for $600, then the financial analyst says I have LOST $100. Makes perfect sense, right? They call this obtuse concept "opportunity cost."
There are lots of "opportunity costs" associated with diabetes:
- I will never be an entrepreneur in all reality. I will be a slave to group health insurance. What is the cost associated with that? What if I could open a dog-grooming business and profit $100,000 per year? Not going to happen. I can't assume the risks of a start-up like most can. What if I was able to develop my big idea (a Lysol-type sanitizer in fogger form), and it ended up saving millions of dollars per year in costs associated with kids that get sick at day-care centers, in ball-pits, etc.? How much money is lost to parents staying home with those sick kids? You get my point.
- What if my wife wasn't forced to give up her career to take care of a diabetic baby? Let's assume she earned $40,000 per year, and Emma's been diabetic for almost 5 years now. That's $200,000 in lost income, and a reversal of $60,000 in costs for a net $260,000 swing. That's big money folks.
- What are the emotional costs?
- What are the costs in terms of the morale of the caregivers? And in some cases, what are the costs associated with the loss of a marriage?
- What are the costs of parents that can't always attend their "healthy" kid's games?
- What if that third child that we might have had otherwise was the one that found the cure?
So in strictly financial terms, it's cost our family roughly $300,000 in cost and lost income. In emotional terms, it's been far greater.