It’s something most of us were taught as kids – waste not want not, eat everything on your plate because it could be your last meal and so on.
Problem is, the way we live out these axioms as adults don’t necessarily serve us or the people around us, especially when running a business.
It’s tough to admit to and easy to justify your behaviour on the premise you’re saving money, avoiding waste and so on but the reality is, you expose yourself to the risk of these:
- You get what you give. By putting it ‘out there’ that you’re not willing to pay for things or be abundant with your time or money, you get the same in return from others. Like attracts like.
- People question your value. This presents itself as queries about your prices, scrutiny over your inclusions on jobs and even the quality of your work. They often assume that if you’re tight, then you don’t have much and it gets them wondering if you’re worth what you’re charging
- You focus on saving money and cutting costs rather than growing revenue, profits and wealth. Nobody ever saved their way to prosperity
- You spend disproportionate amounts of time focused on low value tasks. Instead of doing your own bookwork, vehicle servicing and photocopying you could be creating new services, meeting with potential alliances and referral partners and converting some of those quotes sitting in your tray…
So, assuming you actually want to, how do you shift your behaviour and form some different habits?
Start by asking yourself some better quality questions. Here’s some examples:
- What’s the hourly rate of someone else to do this task? → if it’s less than $50 then you should really look to delegate or outsource the task
- What else could I be doing with my time right now? → if you can think of something that would have a bigger long term impact on your wealth, go do that thing
- How much will I actually save by doing this? → often we delude ourselves into thinking the savings are greater than they are. Example, saving 4 cents per litre at the petrol pump for the typical fill up only keeps $2.40 in your pocket
- If I was charging my time out at $100/hour (the least a business owner should be generating for their time) how much would I really have saved? → if you have to spend time to save money, you’re not going to get far. Value your time more and apply it to higher priority tasks
When you realise the true value of your time as a business owner, you might start to think twice about some of your cost saving tendencies. Think of it as investing into tasks and opportunities that are likely to give you a much greater future return than penny pinching and tight wadding to get through this week or month.
Finally, don’t scrimp with your staff. Nobody likes being part of a business that’s mean with the biscuits, pens and copy paper.
Sure, wastage is unacceptable but if your team feel appreciated through gifts, quality coffee and an appropriate supply of decent pens and good technology they’ll feel better about their job, stay longer and work harder.
Oh, and make sure you pay them well too!