Impoverished Frugality – The Essence of Not Winning

I have encountered an amazing number of businesses and individuals who put the majority of their focus on what they don’t have, their limited resources and how they have to save money. When instead they should be focused on what they WANT, what they do have and growing revenue and profit.

There is a time to save, and a time to earn.

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I know first hand how hard it is to invest in a new venture or project when you have no true idea how you will make payroll next week. I have been there at least 50 times. I can’t say I always made the right choice or even a good choice. And certainly not every one of those times did I focus on long-term results and benefits rather than short-term benefits. However the majority of the time I did. (well OK maybe only 52% of the time but that’s technically a majority)

It is far too easy to take the short-term view and focus on saving what little you have. When we lived in Playa El Tunco in El Salvador we saw this every day. A crystal clear example of this was one day when the water lines to a local business had been shut off without warning (happened about 1-2 times a week) and they had not had enough time to fill the water storage tanks. Everyone knew that it might be another day or two before the water came back on and we would have to ration water pretty hard. This was not even a big deal since it happened all the time.

What was a big difference was in how different types of people reacted to it. There was a gringo who was helping out behind the bar that afternoon. He lived in town and knew about the water situation. His response was to fill the dishwashing sink with water so that he could wash dishes all night without having to run the water and waste it. He figured this would save more water than it wasted. This seemed extremely reasonable and wise to me.

The business owner was also a gringo but had become much more acclimatized to the ‘way things are done’ in the culture of El Salvador.  He saw the full sink of water and freaked out. He was incensed that the gringo did not understand that they were short of water. How could he waste that much water?!?!?!!?  The other gringo stared at him and explained that he WAS conserving water by NOT just pouring the water down the drain every few minutes by washing under the faucet.

It was a veritable standoff of radically differing approaches to a threat of limited resources. On the first hand there was the worker realizing that he would end up pouring far more water down the drain by not filling the sink. On the other hand the bar owner who could only see (in his mente) the limited water resources, and not using them was of higher importance than actually conserving them.

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Put into a business context this same scenario plays out everywhere in the short-term focus on not using resources. On not spending or using what you have regardless of the potential return. It is always better to save money where you can, especially if you are investing to grow in the future. While it is true that a dollar saved is three dollars earned.

You still can’t buy enough food to eat with that $1.

 

Thoughts and Counter Thoughts?