#3. Unwatched Nickels: Creeping Expenses
A famous story in my family involves my dad, a Wharton graduate, and his father-in-law, founder of the family business.
The founder, passing by an envelope in the outgoing mail from my father, notices two first-class stamps on it. Grabbing it, he takes it back to my father and asks if he weighed the envelope to know if it really needed two stamps.
My father replies, "No, I thought my time was more valuable than taking the time to weigh it, so I just put two stamps on it."
Aggravated, my grandfather says, "Next time, give it to me; I'll weigh it and possibly save the cost of a stamp." He then says something that illuminates his business philosophy: "Watch those nickels, and the dollars will take care of themselves."
My grandfather was keenly aware that expenses have a way of creeping up until they can kill a business. It happens to entrepreneurs and great companies all the time.
Let me explain my grandfather's philosophy to you. Imagine your company makes a five percent profit on every dollar it makes. That means that a nickel goes to profits for every dollar your company generates.
Now, imagine saving a nickel in expenses. That nickel saved is the equivalent of one dollar in sales. My grandfather's philosophy was profound. His advice to my father will save your entrepreneurial life!
Once a former partner who winced at our watch-every-nickel philosophy left us to make his fortune. After experiencing failure financially, he returned to us, offering an apology. "I understand now why we always turned office lights off unless being used with guests."
Avoiding creeping expenses requires always looking for ways to save that "nickel." Successful entrepreneurs who continue to make a profit, bless their community, and advance their purpose understand this trap.
When trading with vendors, entrepreneurs need to trade hard. This becomes paramount when you realize that every nickel you save is more profit for your business and possible savings for your customers.
Profound: Watch your nickels, and the dollars will take care of themselves. My grandfather passed it on to my father, me, and now to you. What my grandfather passed on to my father and to me, watch your nickels, and the dollars will take care of themselves, will save you from one of the six overlooked entrepreneurial traps that will kill your business.
Harry T. Jones P.S. Email me at harryt@cultivatingimpact.biz and let me know if creeping expenses are a problem in your business. I want to help!
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