Unless you blow your nose with hundred dollar bills and own a villa for each day of the week (let me know if you do!), saving money is up there with eating and breathing.
Everyone wants to save money, and if you have the time and patience to scour the internet and your local grocer in search of the best deals (or even DIY), it’s not actually that hard to do. However, this is not always the case with your business when you need to work out when being cheap will actually cost you down the track.
A false economy is an action that saves money at the beginning but actually results in more money being spent over a long period of time.
More often than not, you get what you pay for. For example, employing a cheap service for someone to create your business facebook page may seem like a saving, but you will often end up spending a great deal of your own time giving direction, corrections and feedback, or worse – paying someone else to re-do your page when the cheap service is complete. A false economy can lead to wasted time and lost opportunities. Your business is too important to not do what is best for it.
So, if you are about to purchase some cheap equipment or a cheap service for your business, weigh up whether the savings are worth:
a) the potential future repairs to that equipment;
b) the frustration of dealing with products or services that don’t deliver what you are looking for; or
c) the loss of potential customers resulting from unreliable suppliers.
Of course, ‘cheap’ doesn’t always equate to poor quality… but unfortunately it often does. The same applies to DIY projects.
Small business owners often want to handle every aspect of their business, so it is normal for them to want to do everything, from media relations through to designing the new logo. However, if customers are walking out the door while you tear your hair out trying make your logo look better, then it is time to bring in the big guns.
Remember, while you might save money upfront by doing some things yourself, by not investing in a professional you could be costing your business in the long run.
When deciding when it is more expensive to do things yourself, think in terms of the time you could spend bringing in business instead, and also that certain areas simply aren’t your strong points of expertise.
Diligent cost cutting and bargain hunting can mean the difference between a successful business and a boarded-up, graffiti-ridden shop. However, business owners need to be mindful of the fact that being cheap could potentially send you broke.
What aspects of your business do you outsource or bring in the ‘big guns’ for? Do you find this is a profitable decision/investment?
* This article was written in collaboration with Jacquie Henderson who is currently completing an internship at Good Business Consulting