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Monday, April 29, 2013

Internet Tax Is Doing You A Favor, You Soft, Squishy Loser

Just in case you weren't paying attention, the FedGov is proposing a new Internet Tax.  Yeah, it's all in the name of freedom and fairness and, damn it, it's just good for America.


Of course, it's none of those things.  It is just another money grab.  Your money getting grabbed, of course.

The talking heads on TV talk about how it makes it fair to the little mom and pop physical store in your home town.  "They just can't compete with the's of the world.  It just ain't fair!"

Frankly, I don't give a damn about fairness.  And this is coming from a guy who owns a physical store - no Internet sales whatsoever - that has to compete against all of the massive (and I mean MASSIVE) online bullion stores., and the like.

They don't have to charge tax on any bullion they sell.  I, on the other hand, must charge 7.875% sales tax on all bullion orders under $1500 (it's California, so don't ask...).  On top of that, because they're so big, the online guys can sell their goods at a lower per-item cost.  Many times, WAY lower.

So how do I survive and thrive?

We don't compete purely on price.  It's a part of the sales component, but there are a lot more things we bring to the attention of our customers.

We make sure they add in the cost for insurance, shipping and wire or credit card fees.  Still, sometimes our price per unit is higher.

We educate the hell out of our customers.  Grab a cup of fresh brewed coffee (our machine grinds the beans and makes a cup, one cup at a time) or a cool bottle of water, plop your butt down, and let's talk bullion.  Why, how, when, where.... whatever you want to talk about.  We tell our customers what we believe, why we believe it, why we personally buy (and rarely sell), and that they need to go away and make their own decision based on their own research.

Try getting that from some guy with a script on the phone.

Next, we discuss delivery.  Give us money, walk out with gold or silver. It's a hell of  a thing looking at a stack of silver bullion, fingering it like a pirate's treasure, and then walking out empty handed for a couple of bucks.  It happens, but not often.  When the big guys tell you you can get your stuff in 4 to 10 weeks, well, some of the luster comes off the dollar per silver ounce you're saving.

I think the biggest benefit is one that actually draws most folks to physical stores like ours:  privacy.  No matter how you slice it, if you buy online, somehow, somewhere, your name is now in a database.  Entities buy those databases, including good old Uncle Sugar.

People don't like that.  I tell them that we suggest not giving us their name for their receipt when they buy bullion from us.  I ask them, "If you go into Walmart and buy underwear for cash, do you give the clerk your name?"  They get the point.  People are so used to giving away their privacy.

In short, we provide, "added value".  We work hard to define and sell the idea that value is more than just price.  It's the whole package.

It's hard, it's time consuming and it's costly.  But we've built a business around that philosophy.

Sorry to those of you out there that are business owners and think this new tax will "level the playing field" and mean your business will be saved.  You're wrong.

If your business needs a Fair Share Law, ala Atlas Shrugged, it's already dead.  That business pulse you feel is just the last drop of business blood dripping out of your system.

If your business has significant online competition, you should have changed your business model over a decade ago.  And every year since.  If you get soft and fat, your market share gets gobbled up by the competition, regardless of how fair things may or may not be.

You need to look at the weaknesses of your competition, and bring those to the forefront of the mind of your customers.  What's important to your customers?  Why are they buying this product, regardless of the source?  Sell to those emotions, and convince them that they get more value by coming to your store.

Maybe you're going to have to get off your butt and actually add some value.  No one ever said business was easy.  Feast and famine are part of the game.

Maybe you need to diversify your business. 

Like with my "gun training business".  It's much more than that.  We do emergency prep (for individuals and businesses), safety awareness training, pepper spray and stun gun, introductory pistol, advanced pistol, private lesson pistol.  Common thread:  Personal responsibility and safety.

Going back to our bullion business, we actually have 4 markets we go after.  Bullion buyers and sellers, scrap gold and silver sellers, discount jewelry buyers and numismatic (collectible) coin buyers and sellers.  They're all related (precious metals) but have separate supply and sales markets. 

We're not trying to sell pool chemicals in an ice cream store!  We do what we know, and always look to expand or develop new, related markets.  We fail much more than we succeed, but we fail during tests, so our entire business is not placed at risk.  When we hit a homer, we hit it hard.
Nothing in this world can take the place of persistence. Talent will not; nothing is more common than unsuccessful people with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated failures. Persistence and determination alone are omnipotent.
--Calvin Coolidge

Back to the Universal National Patriotic God Bless America Sales Tax:  You know how this will be sold, right?

We're now seeing all of these small business owners on Fox and CNBC whining about how tough it will be to know the 10,000 different tax rates (a valid whine, in my eyes - but come on, Man Up).  So, Nanny McTaxYourAss will tell us, "No worries, children.  We're going to administer this new program.  Online sales will have a single tax rate (or just a couple), regardless of where the sale was made.  In the name of fairness and equality and fairness and pride and fairness, the money will come to DC, where we'll siphon off uh, take a few pennies and send the money out to all of you little towns and hollows on a fair and equitable basis."

Yeah, they'll fix your problem of having to figure out thousands local tax rates - a problem THEY created.

Ain't that big of them?

Copyright 2013 Bison Risk Management Associates. All rights reserved. Please note that in addition to owning Bison Risk Management, Chief Instructor is also a partner in a precious metals business. You are encouraged to repost this information so long as it is credited to Bison Risk Management Associates.


Anonymous said...

Most interesting that in the guise of "fairness", the chosen vehicle of equity is to punish the other guy.

Why not end sales tax altogether?

That would be fair.

Chief Instructor said...

No taxes?! How would the Nanny State lampreys survive? My upcoming post makes my head want to explode. Government with one hand reaching into your pocket to take taxes, and with the other hand, taking away your ability to run a business.... which produces the taxes they so covet.