- Garry Gooding
Running a Business Is Different Than Running a Charity
RUNNING A BUSINESS IS DIFFERENT THAN RUNNING A CHARITY: One of the many business themes from It’s a Wonderful Life’s big screen.
FACT: No matter how benevolent it may ultimately be for mankind, the primary reason for the existence of a for-profit business is selfish. The goal is to put profit in the owner’s pocket.
The difference between a charity and business may be obvious to most, but not necessarily the Baileys. In the scene where young George seeks advice from his father at the Building and Loan, he interrupts an argument between Peter Bailey and Mr. Potter. At one point, the elder Bailey suggests giving one of the shareholders a break by extending the time for payment because times are hard. That is very charitable of him. But what if all the shareholders asked and were granted such a request? Do you think the B&L would be around long?
This is the first of several references to Peter and then George’s benevolence. Potter’s rent collector’s reference to the undervaluing of the houses in Bailey Park is another example. Clearly the Building and Loan’s benevolence nearly cost them the business during the bank rush and drove Peter to his grave.
Even charitable organizations are allowed to cover their expenses..This is essential since there are expenses like rent, maintenance, accounting, insurance, salaries that must be covered.
Of course, a business must address these same issues plus generate a profit. These profits take care of selfish needs like supporting a family, growing the business, acquiring wealth and the security it can bring, and often to please owners/stockholders. Without profit, how could George have accumulated the “$2,000 he used to save the Building and Loan during the bank run?
From his position on the Board, Potter sees the Building and Loan’s unnecessarily small profit margin as a form of charity, something abhorrent to him. Apparently the rest of the Board has no problem with the way the business is being run, however.
In retrospect, Potter’s mocking of how George ran the business ruined his best chance to maximize his own profit. With a bit more patience, he likely could have eliminated the only financial competition in Bedford Falls. Without competition even a poorly run business can make a profit.
Rule #1: Make sure decision makers are on the same page regarding financial goals, the means for attaining them, and the values to be applied along the way.
Fresh Snow on Bedford Falls, my sequel novel to the movie opens by addressing the business implications of the missing $8,000. On the pages that follow, I endeavored to revisit the impact profit, wealth, success and satisfaction as the plot progresses through the characters and, hopefully, the reader.