Glickly -One Transaction To Change Everything? - Glickly
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One Transaction To Change Everything?

28 November 2014
business ethics

If we don’t lose our small business mentality, we’ll remain as small businesses, indefinitely. The person with the small business mentality treats the local economy like it was a world economy. They don’t care about expanding because their business is ‘ticking over’ and there’s bread on the table. And while that’s alight for the short term, it’s not sustainable. Here’s why.

“You buy my product and I’ll buy yours”.

It work’s a bit like that, and it will be our downfall. Net-on-net, it’s a no-win situation for the business (or the consumer) in an economy that chooses to trade in such a manner. Businesses that are continuously performing that kind of reciprocal-centric activity are on a slippery slope. And we’re all guilty of it. Unknown to ourselves, we’re all on a proverbial ‘road to nowhere’ if we don’t change our business strategy. And fast.

To illustrate this, I’ll simplify… consider the following.

Let’s say that our local area has a finite amount of cash resources. Let’s say that there is a total of $1M spent in our region annually. There are 1,000 local businesses and 999,000 customers. Everybody’s got a dollar each. Now here’s the thing: not even the most innovative and hard-working business will ever be able to expand or grow when if that $1M circulates in a closed-loop. I’ll elaborate.

Given the nature of the small business owner who sells his product/service locally, it could be perceived that a sale worth $1,000 in a week, is a good result. However, it means that somebody else (a consumer or a competing business) is down by $1,000. A business (or consumer) is worse off than they were before any commerce took place. That can’t be right.

But you might say that the business which made the $1,000 now has more than they had prior to the transaction. Well, they do. That is until they go to buy something. So the business owner takes the $1,000 and then puts it back into the money-pool. And round and round it goes. Everybody is working (hard), everybody getting paid a (fair?) wage and everybody is spending. No problems there, right? Let’s just keep our heads down and grind it out year-on-year. We won’t ask too many questions about the broader scheme of things and we won’t fix what isn’t broken.

We’ve said already that on the surface, this scenario isn’t really such a problem. But if you are to look at the pieces that are keeping this micro-economy afloat, you’ll see that the pool of $1M is decreasing every day, by just a few dollars. It’s almost imperceptible, but it’s decreasing all the same.

You see, to keep this local economic wheel in motion, we need somewhere to put our money while it’s moving from one person to the next. Typically we use banks for this. I don’t believe that it’s too much of a stretch to suggest that most people have a bank account?

So the local bank is charging a few cents here and there on all of our transactions. But, the bank isn’t putting those cents back into our local economy. This means that the balance is offset by a few bucks each year. We’ll the banks are not really playing by the rules then. No, they’ve got a different business model. It’s a good one. They take a little bit here and a little bit there, but never put any of it back into the pot.

Instead, they take that money and move it elsewhere so that they can invest it, and turn that money into more money. It’s worth noting that some of the money they take from us in bank charges, is sold back to us for more than it’s worth. That’s the product they sell, that’s a bank loan right there. Ingenious. So they’re the only ones who are ultimately increasing their net wealth, consistently.

Unfortunately, it’s not practical to not use banks (or any of the many other institutions that are realising net-on-net profit from our trading). So what can we do that’s practical, but can make things better all round for us regular Joe’s and Jane’s.

Next week, ensure that your business makes one transaction that is outside of your local micro-economy. Just one transaction. (And don’t use a bank, use cash!). That’s all it takes. It’s a baby step, but it’s a baby-step in the right direction.

If we all do this once a week, while our net-profits won’t see a direct increase, the quantity of money in our closed-loop local micro-economy will begin to grow. The $1M that we started with in Year 1 might be $1.2M in Year 2. And so on, and on, and on. That means we have $200K more that we started out with at year end. That’s an improvement no matter what way you look at it.

We just need to ensure that we keep making those external transactions and keep the resulting wealth in our hands, as opposed to letting somebody else have it.

As I said, I know that I’ve over simplified– but this is just for illustration purposes. The concept remains sound, I believe.

We need to be smarter about where we get our business revenue. If we don’t, we’re stealing from the poor to give to the rich.

If there’s a better way, just make a suggestion in the comments below. We can change things. We should change things.

-Jon Ryan

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One Transaction To Change Everything?

21 responses to One Transaction To Change Everything?

  • Lindsey Gathman says on January 21, 2015 at 9:18 am

    Just one transaction! Wouldn’t it be nice if we could change things here and now. Let me know when you’re doing your next post? I’d like if it could be a bit more expansive than this though. I feel you have treated the detail a little bit lightly. We, for one, do not want to be on that road to nowhere! -Lind

    Reply
    • Glickly says on January 21, 2015 at 12:13 pm

      I’ll keep you posted Lindsey-

      Reply
  • Karly Boissoneault says on January 21, 2015 at 9:16 am

    We make sure that we do at least one sale to bordering countries each day. Even if we don’t sell anything, we always give it 100%. -K

    Reply
  • Priscilla Fuchs says on January 19, 2015 at 1:27 am

    This tit-for-tat buying and selling creates a false sense of worth. I stopped selling to my friends about five years ago and it had the added benefit of expanding our companies reach into neighbouring markets.

    So what happened was we got extra revenue from outside Berlin without feeling under any pressure to reciprocate sales. It’s still working for us nicely. Just what to share that with you!!!! :-)

    Pris

    Reply
  • Twyla Trumbley says on January 17, 2015 at 1:23 pm

    We’ve been saying this for years here……. Now if we can get somebody to listen that would be brilliant….. And you were right about the banks…. They are greedy bastards. -Twyla

    Reply
  • TommassTheTank says on January 14, 2015 at 10:51 pm

    It’s not exactly rocket science, but it just about does the trick. It’s obvious that you are no economic’s expert, however the thought processes are clear. It’s a good attempt to simplify something that is very annoying for small business owners.

    Reply
  • Francisco Krstic says on January 13, 2015 at 11:15 pm

    The banks. The banks. The banks. There will be our downfall
    -Franco

    Reply
    • Glickly says on January 14, 2015 at 9:17 pm

      It’s sad but true. They’re a necessary evil.

      Reply
  • Melony Hocke says on January 13, 2015 at 7:28 pm

    We are only starting out, so we don’t have enough sales to make any difference anyway just yet. Hoping to change that in the future though.

    Reply
  • Michel Novitski says on January 11, 2015 at 9:13 am

    Were going to try to make one external sale at least this week.

    Reply
    • Glickly says on January 12, 2015 at 12:16 pm

      All it takes is for each person to do the same, and everything will fall into place.

      Reply
  • Curt Jonathan says on January 9, 2015 at 12:30 pm

    Stick with that Melony. Hopefully everything will come right for you. It usually does in the end if you try hard enough.

    Reply
  • Emmett Dzwonkowski says on January 6, 2015 at 9:31 am

    I’d like to do this but I owe so many favours to my local colleagues and friends and family (and the list goes on) that we’re sort of stuck in a loop!!!

    Reply
  • Mikki Cournoyer says on January 5, 2015 at 12:11 am

    Luckily, it’s not all centralised around Holland. Need to be more specific.

    Reply
  • SaraAshton says on January 3, 2015 at 11:19 pm

    WELL DONE.

    Reply
  • Bailey Mccullagh says on January 2, 2015 at 10:05 pm

    I’m sorry but this doesn’t really make much sense to me. The model for local economies is much more complex than you portrayed. I think that if it was as simple as this, local economies would soon find themselves in trouble. However, it is good to see somebody tried to analyse it.

    Reply
  • Gus Tangney says on December 28, 2014 at 9:21 am

    I fully agree. External transactions are the key to improving the local economy. Our population is about 350,000 here, so I think it’ll take more than me to make a change‚Ķ I’d like to be proven wrong though.

    -Gussy

    Reply
  • Charleen Barkema says on December 21, 2014 at 5:07 am

    Hi, it’s Charleen here. We were explaining this concept to some of our users. It got some great debate going on in the room. Thanks for sharing– keep it up!

    Reply
    • Glickly says on December 23, 2014 at 11:18 am

      That’s great to hear. All debate is healthy.

      Reply
  • Geoffrey Cerbone says on December 3, 2014 at 11:10 pm

    I cannot believe that people are taking this for real. The situation is not representative of our Dutch community. I think you should try again.

    Reply
  • Reva Malakowsky says on November 29, 2014 at 6:08 pm

    Looking forward to the next session

    Reply

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