Often, during budget discussions, my boss asks, 'if it was your own money would you spend it this way?'
Unless your reason for being in business is not to make money, you doubtless ask yourself whether you are spending what you make in the best way. If you aren't, you should.
You can increase your income by making more, or spending less, and taking the 'man next door' attitude to your expenses can help you achieve savings to grow your business. If you need to shed weight you should expend more energy than you consume. If you want to grow financially you should spend less than you earn, and then put the savings where they can work for you. According to the book 'The Millionaire Next Door', here are some common characteristics of people who are known to have succeeded in accumulating wealth:
- They are frugal and live well below their means.
- They allocate their time, energy and money efficiently in ways conducive to making money.
- They value financial success more than showing off wealth.
- They are self-made men and women (not inherited wealth).
- They chose the right business to begin with.
Here are some things to consider if you are looking to minimise expenses:
- Rather than buy items at retail cost form several suppliers, get volume discounts from designated suppliers.
- Conduct an energy audit to identify areas for conservation
- Find out if your professional association has negotiated any discounts for members that you can benefit from, such as insurance.
- Use specific hotel groups or airlines to accumulate bonus points for the business.
- Avoid using overnight delivery where delivery in 2 or 3 days will also work.
- Replace travel expenses with video and web conferencing.
However, frugality should never compromise quality; otherwise you will lose customers and not have any profits anyway.
Nor should you avoid product development. If you do not keep up with the needs of your customers you will lose business, let alone profits.
Also, do not seek to make savings by delaying repairs and maintenance. The potential loss from major breakdowns is not worth the risk.
In your business, it pays to watch the pennies, and one way to ensure this message is understood is to share your profits with your managers. When they know that they have a stake in every penny saved by way of profit sharing, they are more likely to pay attention.
I was thinking of a young lady friend who was frantic about learning how to make chapatis . She asked endless questions and begged me to invite her whenever I had that on the menu. She loved chapatis .In her own words, she wanted to be able to make 'divine' chapattis with her eyes closed. In Maslow's words, she was aiming at unconscious competence.
