The P.A.

A weekly address from Patrick Adams,
President of St. Louis Community Credit Union

Good Companies Earn Good Profits

On November 26th, 2012, posted in: Uncategorized by

My blogs are numbered 1 through 52. At the beginning of the year, I always wonder where I’m going to come up with 52 more ideas. And then life happens.

What starts out as an almost insurmountable task of 500 words times 52 weeks ends up happening. This is Week 48 (in blog counting), so I’ve just about made it another year. And for those of you wishing I’d run out of ideas and put this whole blog thing behind me, well it doesn’t look like it’s going to happen anytime soon. Ideas are flowing like the warm pour of morning coffee. Thus, week #48’s blog titled: Good Companies Earn Good Profits.

Value is what consumers seek. Good companies know how to provide good value. Good value in corporate terms equates to “good profits.” Companies need profits. When you see a strip mall with too many empty bays with plywood fronts, the formula broke down. No value existed, thus no consumers sought out the establishment. No profits were gained, doors closed. Simple, yet there are lots of moving parts behind the scenes.

Note that I said “good profits.” They are essential. Profits in and of themselves aren’t pleasing to the consumer. If Joe and Mary think that a company is getting rich off their hard-earned dollars, then the value they perceive in the company in question diminishes, and Joe and Mary take a hike. It is a very delicate balance – one that many companies are good at and many others are not. They’re easy to distinguish – the good companies aren’t boarded up.

Starbucks is a good one. For about 80 cents more, I can use the “clover” brewing process which provides me with even more flavor, aroma, and deep rich body in my coffee. “Clover” is a brewing technique that is quite impressive to watch. That’s why I spend the extra 80 cents. My coffee beans are weighed out with precision. They are ground with like precision and placed in a machine. A whisk is involved ever so gently and my coffee beans are showered in very hot water, moved up and down, pressed and spouted into a small metal pitcher in which my morning brew is then transferred into my cup. The coffee tastes better, I think. But watching the process is worth the price of admission.

BINGO! Starbucks has found “good profits.” I’m spending 80 more cents for something that costs nowhere near 80 cents, and I love doing it. Folks, that’s called value. If I’m willing to pay for it and it creates some redeeming goodness for me, then it’s a “good profit.”

Southwest Airlines is good at it. So is St. Louis Community Credit Union. We’re loaded with value and, as a result, make “good profits.” Those profits are returned to our members to create more value, and the cycle repeats itself time after time, member after member, year after year.

Our “good profits” are given back to you. Starbucks and Southwest pay their shareholders. We pay our stakeholders. In that sense, we might be the best at it. We just celebrated our 70th birthday. The “proof is in the pudding.”

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