The Hot Dog Vendor.
I’d love to give credit to the original author of this story, but I’ve read or heard multiple versions over the years. And, I don’t have a clue who that person would be. But I can say I read two other versions of it recently. And so, credit does go to Smith Dickson, an Accountancy Corporation for their version, and to the businessman, Jeff Swystun for his version. Since I don’t even know which version was the original or when it was originally penned, I’m paraphrasing the story and embellishing with my own words and making this version my own.
The story goes something like this…
There was a hot dog vendor in the middle of the busy business district of an important large city who took incredible pride in his street business. People could see and feel his enthusiasm for doing his best. He was fair and honest and had a warm personality. And, he was always thinking of ways to give more use-value in his products than he would charge people in money-value. He had an older cart but he would wash it down daily and repaint it regularly. Like a barber, he listened a lot while his customers conversated throughout each interaction with him. They always told him stories and he tried to keep up to date on them, but he paid particular attention to what goods and services his customers wanted from him.
In fact, he was an example of what entrepreneurs should do to run, maintain, and grow a business. He thought it was all just common sense and everyone was doing what he was doing. His attention to detail was an integral part of delivering the best hot dog experience he could to his customers. From having enough straws and stir sticks and homemade quality condiments to a kind word and telling a fun joke, to keeping his customers engaged and smiling.
Because of his success, he added a breakfast sandwich for the morning commuters by the train station. At lunch he was his own Point of Interest among the exploring tourists and hurried executives in the heart of the city. At the end of the work day he would maneuver his cart to a space close to a trendy night club and sell snacks and quick bites to eat to the patrons and passersby. He had lighting and an awning to attract customers and keep them out of the rain and snow. He even bought a beautiful neon sign that could be seen at night from a long distance. Patrons felt safe and satisfied and important. It was a good synergy for everyone.
He was a strong believer that if he worked hard, delivered top quality workmanship, and paid attention to detail, it would shine through his business and he would do well. Since English was his second language and he never seemed to like the spin on the news anyway, he paid less and less attention to it as time went on. Rather than paying attention to the drama and gossip in the so called news, he spent his focus and attention on providing an amazing hot dog experience. And, his customers rewarded him generously with their loyalty and gratuities.
He was very successful and saved his profits religiously so that he could provide for his family and put his son through college. His son graduated with a double major in business and economics and got a great job at a corporate consulting firm. More importantly, his son finally gained traction with his dad through constant harping on his father to cut back and stop spending so much money on his products and business practices due to rumors that a recession was coming soon.
The hot dog vendor just knew that his son knew best. After all, his son graduated with honors at one of the best universities in the country. So the vendor started spending less on “non-essential” items. His customers were now getting only one napkin for the messy meals instead of 4. He now provided pre-packaged condiment packets rather than the homemade recipes he used to provide. To save on the required expensive kitchen costs, he reduced cleaning his cart daily down to 2 times per week. Rather than replace the ballast for the neon sign that went out, he bought portable hanging lamps that would clip to the top of his awning. Customers were getting wet again because the weight of those lamps made the awning slope badly. But, the vendor shrugged his shoulders thinking that that was what was necessary to cut costs in preparation for the rumored recession.
Next, he cut out the breakfast sandwiches from the menu because the margins weren’t as high as hot dogs. Then he started buying average quality products because his son had pointed out to him that a hot dog is a hot dog is a hot dog and that the customers were buying only a hot dog and not an expensive steak dinner. So with the rumors of a recession, it’s better to increase the margins per unit sold in anticipation of the number of units sold dropping. His son was proud of his father’s proactive adaptations because now he would make more money due to lower costs and would be better prepared to weather the rumored recession.
The signs of a recession were becoming evident as the number of customers dropped almost immediately, along with a drop in the size of each order and length of time each customer hung around. Even a large number of his once very loyal customer base quit going out of their way to buy his hot dogs. Before the recession his son so wisely prepared him for, he was always able to count on a number of first timers to his cart. But now, the curious passersby just kept on walking. The synergistic energy just wasn’t there anymore – only a somber timid hot dog vendor trying to weather what he believed was a real recessionary storm.
The hot dog vendor knew this was the right thing to do, though, because his son was educated at a fine university and is now a business consultant to large corporations. His son pays attention to the newspapers and the TV news and knows what everyone else is doing. He’s way up there on the business food chain but always sets aside a few minutes per month to steer his dad in his hot dog business. Needless to say, the vendor was grateful.
The vendor felt like he knew a valuable secret to business that others didn’t know. And he quietly felt bad for a new hot dog vendor who had just opened up his business nearby – just in time for the economy to go into a recession. Especially when he saw the new guy spending more than he should have been on the exact things he himself had just cut back on.
Because of the loss of revenue from fewer customers, his son recommended raising prices to make up for that lost income. In a relatively short time, the vendor restricted his hot dog business to just the park for the lunch traffic. He was making more money from each customer that came by but the overall number of customers wasn’t at all the loyal, much larger following he once had. He would just look at his business revenues and get so happy that his son helped him prepare for the “recession.” He couldn’t imagine having to pay for all those extras he used to provide while simultaneously experiencing such a severe drop in revenues due to the “recession” that was now obviously coming.
After a few months, the old man’s hot dog business had all but died a slow death. Fortunately, his son got him a job in the corporate cafeteria in the building of his son’s consulting firm. Which led him to sell the remaining of his equipment, signage and supplies to the neighboring hot dog vendor who had just recently opened up shop.
The new hot dog vendor was so appreciative and full of gratitude, he gladly paid a slightly premium price for everything from the old hot dog vendor. With the extra cart, he could hire his nephew to expand his operation to greet the commuters near the train station with a breakfast, lunch and after-work menu. And then after he himself would work his own lunch crowd, he would roll his cart over to a neighboring night club to satisfy those patron’s and passersby early evening snack cravings.
The new hot dog vendor was a proud owner of a going concern of his own. He was responsive to his customers and listened to them and would do his darnedest to deliver to them what they said they wanted. He would wash his carts every day and paint them regularly. He even got some good deals on neon signs so he could work a little later into the evenings before calling it a day. People could see his carts from far away and would stop and buy a hot dog or two with all the fixings just because they felt a higher, lighter, more synergistic atmosphere. His customers were loyal and were always greeted with smiles and jokes and good wishes. He was very successful and it made him very proud.
It wasn’t long after that the newspapers and TV broadcasts announced that the recession didn’t really materialize as was originally feared. Sure, there were some needed cutbacks by large, inefficient corporations but for the most part, few people lost their jobs and the city roared on. Business was good. Times were good. It turns out it was a great time to be a hot dog vendor. Which all tells us that perception is reality – even when it’s not.
In order to try and wrap our heads around the real estate market, we’re going to have to draw attention to, and identify a few things in more detail first.
Economics is the study of the choices people and governments make – in one capacity or another – regarding the resources, good and services in their sphere of influence and control. Please understand that these are my words and definitions. But, the three main assumptions in the economics are that a) resources are scarce, b) that people make rational decisions and always try to maximize their financial situations, and c) that everyone’s goal is efficiency in the choices, uses and decisions that they make.
Behavioral Economics is the study of individual and public choices and how various governmental tools – such as taxes, regulations and arbitrary price points – drive those decisions in the marketplace.
Marketing is the discipline of trying to influence as many people as possible to make decisions in favor of the marketeer’s goals. Be it to buy, sell, save or dismiss something or to stop doing so.
The real estate industry impacts everyone – from security, to taxes, to rest and relaxation, to business, to health and well being – at every level throughout the economy.
The job of a licensed residential real estate “agent” is to explain all of this to their clients and assist them in the purchase or sale of their houses, condos, land and investment properties.
We all have choices. We can approach our lives and our homes like the hot dog vendor before the wisdom of education was applied, or after the wisdom of education was applied. We can choose to be the old hot dog vendor and end up in totally different place than we really want to be, or we can be hopeful and hardworking and smart like the new hot dog vendor and make our own way according to common sense and end up exactly where we love to be.