As a business owner, you’re probably looking for ways to maximize your revenues while minimizing your expenses. After all, isn’t the primary goal of being in business to make a profit?
When you own a company, the last thing you should do is spend tons of money on the latest business trends that promises quick cash. This isn’t a good way to spend your money.
Saving money will require you to cut costs and make wise spending decisions. Cutting costs in your business is essential. You must be careful to know the difference between being cheap and frugal. Here’s what you need to know.
1. Focus on cost
Cheap business owners only focus on the cost of an item. Frugal business owners pay attention to the cost as it relates to the value of an item.
The cost of an item shouldn’t be your only focus. If an item costs a considerable amount of money and it brings value to your business, then it’s likely a good buy.
The important thing to remember is that your focus shouldn’t be so fixed on cost that you don’t recognize how it will benefit your business. Many cheap business people miss out on exceptional opportunities because they aren’t open to spending money on essentials.
2. Inconsiderate of others
Cheap business owners look for ways to save money even if it’s at the expense of other people. Frugal business owners make financial decisions that don’t infringe on the well-being of others.
If you rent an office for your business, you’ll be required to pay for heating and cooling expenses. Cheap business owners will maintain office temperatures that help them save money even if their employees are uncomfortable.
Frugal business owners will keep the room temperatures comfortable. However, they may look for other ways to cut costs that don’t inconvenience others.
3. In search of freebies
Cheap business owners don’t want to spend much money. As a result, they are constantly on the hunt for free items and unbelievable deals.
Here’s an example. John doesn’t understand why good customer service software costs $199 per month. Instead of purchasing the software that he needs, he uses the free version and supplements it with other solutions.
Frugal business owners like to find good deals and free items. However, they’ll invest their money in a solution that makes their businesses run effectively.
4. Short and long-term thinking
Cheap business owners are short-term thinkers. They’re only concerned with how the expenses will affect them today.
Frugal business owners think about how an expenditure will affect them in the future. They know that they might have to make short-term sacrifices to realize long-term gains.
5. Spending priorities
Frugal business owners operate using a budget and prioritize their spending. This means that they will opt to spend more money on the essentials and skimp on things that don’t matter.
Cheap business owners don’t have spending priorities. Their goal is to get everything at the cheapest price as possible. Even if it means they have to sacrifice quality to do so.
You shouldn’t be so fixated on costs that it adversely impacts your business. For that reason, it’s important for you to be aware of the difference between being cheap and frugal.