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The individuals founding the bakery took a risk in firm formation (incorporation, initial lease collateral, equipment loans which may have been cosigned by the
by mgh95 3y ago
The individuals founding the bakery took a risk in firm formation (incorporation, initial lease collateral, equipment loans which may have been cosigned by the owners as individuals, etc.). The rewards received were purely salary based -- exactly what a worker receives. The net result is that while the owners of the business received a return (a good salary), this return is not a capital return based upon the risk absorbed as founding which may have been greater.
- innagadadavida 3y agoDo you think the margins were low because they just used higher quality ingredients and did not doing any food management? If so the next owner can optimize these inefficiencies and extract value from the brand value.
- Humboldtsnee 3y agoIs using a higher quality ingredient an inefficiency? It seems like it produces a different product.
- transcriptase 3y agoI mean… gestures broadly at every company large enough to hire MBAs
- mediaman 3y agoUsually it’s more structural than that. Too much competition, too few customers, too little scale to afford the type of talent that can optimize inefficiencies. There is a reason these small localized businesses tend not to produce outsized profits.