Tuesday, December 26, 2017

Misusing Money: Why It Pays to Be Frugal at All Stages of Your Business

Warren Buffett is one of the most successful, happiest and wealthiest entrepreneurs on
the planet today. With a net worth of around $84.3 billion USD, it’s hard to even imagine
the scale of how rich this hardened investor and philanthropist is. However, Warren Buffett
has a secret that may surprise (or make complete sense) to people; he’s frugal. Just to
give you an example, here are some of his silliest quirks:


  • He does not have a computer on his desk at work.
  • Nor does he have a phone on his desk.
  • He’s only sent a single email in his entire life.
  • He’s lived in the same home he bought back in 1958, currently valued at only $260,000.
  • He eats a breakfast of Oreos or McDonalds every day, depending on availability.
  • He drinks at least 5 cans of Coca-Cola every single day.


Perhaps his unhealthy diet is the secret to his success. Maybe his resistance to technology
has made him become one of the most successful entrepreneurs in the world today. Perhaps
it’s something different, or maybe it’s just a combination of everything that Buffett does
which gives him the level of success that he has now.


One thing’s for sure, many of those perks point to one word; frugality.


Source: Pexels


Learning From the Master of Frugality Himself


We can learn a lot from how Buffett treats his business and his life, so let’s break
down each of his quirks and examine how they relate to frugal business operations.


Relying Too Heavily on Technology


One of the biggest money sinks in business today is technology. Whether it’s purchasing
too many computers that you don’t need or investing in technology when it’s not needed,
it can create a huge dent in our wallet. Although Buffett himself shy away from technology,
it doesn’t mean that his businesses and his practice don’t embrace technology.


What Buffett’s quirk here can tell us is that you don’t need technology to be a successful
business. In fact, it can add so much extra worry, expense and bother that it can actually
become detrimental to your business. In other words, make sure you know how to actually
operate a business and run it in a traditional way before you rely on technology for everything.
That’s not to say that businesses should not rely on technology; it just means that businesses
should think of technology as an extension of their business practices and methods.


Think of it this way; if your business doesn’t know how to handle customer service correctly,
then what is the point of having cloud software dedicated to sorting and managing customer
feedback? Your employees need to understand what it means to engage with customers
before you use technology to assist in it. Similarly, it’s no good trying to go paperless if you
still heavily rely on paper records and documents. Depending on your business, paper
documents might even be preferred. Making swift and drastic changes to your business is
not beneficial to your company, and relying on technology for everything from the start is
suicide. Learn how to operate your business the traditional way before you extend it with
the help of technology and you’ll have a much higher chance to succeed.


Source: Pexels


If It’s Not Broken, Don’t Fix It


Warren Buffett has not changed his home for over 50 years. The reason? Because he doesn’t
need to. The same type of logic can be applied to businesses and it’s often interpreted like
this; don’t change what isn’t broken. There are some people that would argue change is
good for business, and this is usually good advice. However, there are also times where
changing how your business works can actually break it and cause more chaos than you
might be able to handle.


There’s a well-defined line between change for the sake of change and change that can
actually be beneficial to your company. For starters, make sure the thing you’re changing
is actually something that needs to be changed. For example, if you’re growing as a business,
then “change” can be interpreted as moving into a bigger office. This is crucial because you’ll
need more space to house more employees and equipment, so it’s the type of change that
is almost certainly beneficial.


A bad example of change is, as explained in the previous section, completely overhauling
something in your company. While change is desirable, swapping the way your employees
work in a single day without trialling a new system or machine is suicide for your business.
Your staff need to learn how to adjust to the different workflow and they also need to
understand the flaws that they could encounter.


If you’re able to get a loan qualification for the purpose of expanding your business, then
focus on making changes to your business that are actually needed. Running out of space
in your office? Invest in an expansion, moving to a larger office or renovating your office.
Found a bottleneck in your workflow? Invest in solutions to remove that bottleneck. Don’t
invest your money poorly by doing so blindly and without making proper decisions backed
by advice from senior members of your staff.


Source: Pexels


Conclusion

The way Warren Buffett lives his life is full of hidden lessons that we entrepreneurs can learn from. By holding on to our money and being frugal, it’s possible to be successful and continue growing our companies without wasting a single penny. Frugality isn’t just for the home or for your lifestyle–it can also be a way to operate your business. In short, don’t invest in technology if you aren’t certain that it can actually become a beneficial part of your business. In addition, don’t bother with making changes to your business if they aren’t due. Making a change for the sake of doing things differently or to use your capital is a terrible idea, and you should always analyse the risks involved with making drastic changes to your business before you invest.

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