Monday, October 20, 2008

Incredible Foods Fires Starbucks

http://money.cnn.com/2008/10/08/smallbusiness/Choose_the_right_clients.fsb/index.htm?postversion=2008101608
"I had two employees who did nothing but write reports for Starbucks," he recalls. Starbucks was opening ten stores a year in each of its regions, so we had five trucks on the road going in different directions. The cost of fuel, employee benefits, insurance, and workers' comp made the whole thing completely unprofitable."

My Response: Usually small businesses appreciate the opportunity to work with bigger companies with a known name. Jim Christy, CEO of Incredible Foods, is not one of these people. Christy fired Starbucks, his biggest accounts that revenue 48% of his profit. Although many may see this as a huge lost for Christy, he explains that the opportunity cost wasn't as high as it seems. He was unable to see an increase in profit due to his expenses within his business. Christy should have continued to work with Starbucks, at least with their stores that were local, which probably would have still help him.

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