For a small business owner business frugality is tied into the personal family lifestyle. In family life, we should be spending and investing our money to accomplish the things we value: the necessities for a comfortable family life and investing for a comfortable retirement. Does a family really need two or more flat screen, large TV sets? Are several computers and an I-Pad needed? Instant gratification still runs the lives of many American families, “we can be seen driving a 5 year old car”.
In running a small business there are things that we need, but there are a lot of “things” that don’t contribute to the bottom line, at least not at this time. Consider the following examples:
- Can you work out of your home?
- Is an executive suite suitable, with a month to month lease, instead of a long term commitment on a large space?
- Will a lap top computer handle all your work without having a second, desk top computer in your office?
- What software program can best handle your business needs? Can you get by with just one?
- Do you need a one year supply of office material just because it was on sale?
For many small businesses, success is a result of good marketing, planning and sticking to a “necessities” budget. One of the questions that I ask my clients is to make a list of all the things they would like to have in order to grow a successful business. This “want” list becomes a mental block, an excuse for failure. Once this list is created, we review it to determine the impact of continuing without the item or the benefits of the item if purchased. This is a good exercise to undertake whenever a substantial purchase it considered. In many cases the cost of the item does not, at least at the present time, offer a good return on the investment; and often, it is not a real necessity.
A business may generate thousands of dollars in revenue and not have anything in reserve. A well run business buys what it needs and saves the rest.
Budgets are often forecasted for an entire year; the best way to stay at or under your budget is to review each expenditure on its own merit.
Much of what you want may not be what you need.
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