The Demands of the Customer Must be Satisfied (Part 1)
World Teacher's Message No.286


The Question:

The Question: How should companies with consistent deficits change? Also, can you tell us about increasing profit, especially targeted towards smaller companies and stores?

Jan. 27, 2016 Happy Science Headquarter


I have said this multiple times, but even when I look around the city, stores come and go, with new ones replacing old very quickly. Their industries are often different as well.

I look around and think, “this building closed three times in the last year,” but still a new store decides to open there, thinking that they would be fine. I observe the store from the outside and wonder how many months they will last, but it seems like the people on the inside don’t think about this at all. These things happen.

When you only think about your own company or store, you could be optimistic. You must observe the public carefully and understand the toughness of work and business. It is natural to have a subjective view, but you must also have an objective view that continuously observes how the competitors are doing their business, what kind of service they have, and even if a company is in different industries, what kind of things that they are doing.


The Confident Chocolate Store Also Closed

I have talked about this a little before, but there was one time when a chocolate store opened in our neighborhood. When I first visited the store and chatted with the employee, I commented, “You’re opening up a store,” and they said, “Yes, we have had success in Shibuya and it is a well-known store, so I think we’ll do fine here too,” and I could sense their confidence.

Even when I said, “Well, in this area there’s already a well-established and famous chocolate shop that is so famous that even people from Saitama or Chiba come visit, so it might be tough. They form a long line, and they have enough profit so they can take the whole month off in August. They say that summer is not a good season for chocolates, so they don’t open up the store and customers often come from far away. There is that place, so unless you are very careful and prepared, it might be difficult,” they replied, “No, it’s fine. We were successful in Shibuya, so there’s no way we won’t be here.” I was saying, “Well, I see. I think it would be difficult to even last a year,” and as I predicted, they left in a few months.

The locals’ opinions are relatively accurate. The store thought that their chocolate is very good and had sold well in Shibuya so it would sell anywhere, but they left quite quickly.

I have seen a few of these stores, and I have a consultant-side so when I look at various stores and their products, prices, and industry, I can generally predict how long the company will last. However, people who open a store for their first time can’t often think about these things.

When a store first opens, they are featured in magazines and media numerously as an “innovative store” or a “popular shop,” but it is often the case that these places disappear after two years. Reading about these will let you build a business intuition.


Other Companies Will Mimic Profitable Markets

Many things lead to a deficit, but in general, the kind of jobs that bring about profit are copied by everyone. Many people join the industry. You might be able to make a profit if you are the first one to do something in the industry.

For example, if a bathhouse opens in a place in a city of mainly students that does not have any such place or mansions, then it might attract a lot of customers. However, these companies are only thinking about themselves so what if a second such store opens? Then, the business is in danger. Simply speaking, the profit would go down to around 50 percent, so it is difficult. They were not thinking of competitors joining them.

In the hotel industry, it is said that an 80 percent occupancy is ideal, and at least 70 percent is necessary. It is best if you succeed in the 70 to 80 percent range. If it goes above 80 percent and reaches the 90s or 100 percent occupancy—in other words, if the rooms are completely full, then other competitors will join in. These competitors are typically from large firms. When people open a motel or hotel for their first time and make profit, other competitors will see this opportunity and join in with a much larger budget and more luxurious buildings.

When this happens, the hotel that was filled by more than 90 percent and enjoying huge profits will be quickly crushed. They will close when a new building is built just across their streets, just a few meters next to theirs. This is something that could not be predicted at first. If someone gains too much profit, it is inevitable that other companies in the same industry will take part, so you must think about this as well. On the other hand, if you do not make any profit, no one will join in.

In case of hotels, there is a deal if you can get around 60 percent occupancy that can be brought up to 70 or 80 percent with enough effort. You should not try to go over this number, nor go below 50 percent and produce a deficit. There is a subtle line.

A similar occurrence can be observed in any industry that prohibits monopolies.

In religion, too, we have been competing with various institutions in the past 30 years. Many places try to set up such similar competitions, but all the places that challenge us end up leaving defeated. The other side does not understand why they lose, and it seems as though we are barely surviving, but this is because there is the part that can and cannot be seen from the outside.

Even if they think they are mimicking us from the outside, in reality, the part behind the cover is very different. We are not showing everything we have, so this creates a huge difference.

In this sense, work and business are tough everywhere. Some people like Konosuke Matsushita, who has already had success, boast that “In general, business is meant to succeed,” but we are in an age when it is more typical to go bankrupt if you follow the typical route.

We are in an age when, if there are ten companies, only one will be left after ten years, and less than one in one hundred last longer than this. Even large companies and conglomerates often disappear or are consolidated, so it is indeed a difficult time.

In addition, even if the business is going well, a magazine gossip can destabilize the business and cause it to go bankrupt. Even places like Senba Kicchou (a luxurious restaurant in Japan) were roughly hit when an article was written on their reusing of food. Their business will be forced to shut down in no time. For the other Kicchou restaurants to survive, they would need to crush this particular store or else there is the possibility of all of them going down together.


Creating A Buffer During Profitable Times

Akafuku (a Japanese sweet), that originated in the Mie Prefecture was initially well-known for only being sold in Nagoya. The fact that it is only available there, has good quality, and needs to be thrown away after a day attracted customers. It was said that the bean paste colors changed after a day so they would need to get rid of the sweets every day, but this was not the case. It was revealed, most likely by a whistleblower, that they left it on the store shelves for a few days, and when this went public, their business faced difficulties for around a year.

There is also the Shiroi Koibito (another Japanese sweet) that originated in Hokkaido. People who visit Hokkaido typically buy them at the airport, but there was a time when a scandal hit. Even when things are going well, there are rivals, or a dissatisfied employee may quit, spreading complaints that cause a business crisis.

Thus, it is too naïve to think that businesses always go uphill. In general, it is important to create the extra buffer while things are going well. If this does not happen and you think that you are fine as long as you keep pedaling on the bicycle, then the business will crush at any time.

It is not surprising that new rivals emerge, unexpected criticisms or bad publicity spreads, or the industry suddenly goes on a decline. These things happen; for instance, when we look at the past 30 years of Apple products, different products came and went. I think it is a cycle of creating, ending that product, then creating and ending again.

I do not know about the larger companies, but I expect that many subcontractors have gone bankrupt. We used to use tapes which were then replaced by CDs, and now various new devices have come out, so I think business is quite tough.

Part of the industry we are in focuses on books, so we have a foothold in the publishing industry. The publishing industry, too, peaked in 1996 with two trillion and several hundred billion yen (20 something billion dollars) of sales, but over the last 19 years, its sales have dropped by over one trillion yen (10 billion dollars). It has dropped by almost 60 percent. The fact that there was a decrease of over 40 percent means that many companies went bankrupt. Various stores ranging from bookstores to agency stores have disappeared, and many writers probably lost their jobs, with countless deciding the need to become convenience store employees. This shows how tough the situation is.

It is natural that people put in their best effort, but one must continuously look at the decisions of one’s competitors and even pay attention to the innovations of companies in different industries as well, taking note of “what is different,” “what is trending,” and “what is dangerous.” You must hold this learning mindset.

Furthermore, you must not think things will always go smoothly as it is currently, like riding a bicycle. You must always believe that a new risk can arise anytime. Therefore, profits must be put aside to prepare for future risks. You must store food in the warehouse in case of a famine. The weather will not always be the same, so you cannot just be crushed “because a famine hit.” This aspect exists as well.

I, too, was already predicting in the 1990s that a Shoshinkan (Happy Science temple) will be built all over the world, and so the materials were all ready to go; I prepared 15 to 20 years in advance. Even if things are busy right now, if you prepare in advance then you might be okay, since you never know what is going to happen.

So, in this way, it boils down to whether you have been doing the basic, easy things. You must harshly evaluate yourself whether you have been doing the things that your industry, your role, and your shop is expected to do.

Finally, you must know that the result is ultimately determined by the customers. It is not something for you to decide, but for the customer to judge, and this judgment is your success rate. If the consumers are not approving it, then no matter how much you think you are doing well, you are actually not. As a dentist, even when you claim that you are the very best, if customers spread bad reviews that “The operation hurt so much,” “Having your teeth chipped there is the worst experience,” or that someone felt as if they were going to die, then customers will gradually decrease. This is inevitable. The dentist resides in the neighborhood, so this will happen.

No matter how much you think, you must know that there is a part that can only be decided by the customer. (To be continued)

The Demands of the Customer Must be Satisfied (Part 1)
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