“Men are divided between those who are as thrifty as if they would live forever and those who are as extravagant as if they were going to die the next day.” – Aristotle
That admitted, I do make an effort to count pennies when it comes to business.
It’s not a natural thing for me. It is boring and appeals to what seems like a mean and nasty side of my personality. When confronted with diminishing profits, my tendency used to be to work harder and earn more. I seldom thought about spending less. It seemed dull. Cheap. Uninteresting. But that was wrong for two reasons.
First, you can’t always earn more. There are times when your business can’t be forced into growth. We are living through such a time right now. When increasing sales is not an option, cutting costs is often a necessity. If you don’t do it, your bottom line will disappear — one dollar at a time.
Second, being frugal doesn’t feel mean at all. I’ve discovered, much to my surprise, that when I spend money carefully, I feel both smart and virtuous. I feel as if I am respecting the value of money and — just as importantly, perhaps — the value of the time and effort that is contributed to produce it.
Easy money goes easily, but most income is fought and scraped for. It is just plain foolishness to throw it away on something unnecessary, unplanned, or unwanted.
A very successful businessperson I know told me that if you can get everyone in a working group to be respectful of money — to value saving and be critical about spending — a surprising camaraderie will develop. People will work together to keep costs down. They will take pride in their frugality.
I’m not talking about cutting salaries and benefits. I don’t believe in that. I’m talking about:
* not buying a new photocopier when you can repair the old one
* being willing to switch vendors when the old ones can’t be competitive
* reprocessing paper so that both sides get used
That sort of thing.
Profits are the residue of extraordinary effort. If you don’t constantly push to make more sales and to reduce spending, your profits naturally and inevitably shrink to nothing. By keeping the pressure on — both to increase the top line and decrease expenses — you create something that is the product of all that hard work.
Respect the money your business makes. Spend it cautiously. Reinvest it wisely. Understand what it represents and communicate that understanding to all the members of your work force. They are all involved, in one way or another, in the production of profit.[Ed. Note. Mark Morgan Ford was the creator of Early To Rise. In 2011, Mark retired from ETR and now writes the Palm Beach Letter. His advice, in our opinion, continues to get better and better with every essay, particularly in the controversial ones we have shared today. We encourage you to read everything you can that has been written by Mark.]