Analyze those expenses, and you will save thousands instead of dozens of dollars. If you stop in for an ice cream anytime soon, take note of my garbage bags.
By John Murray, III
This column will make a couple people close to my fudge operation laugh pretty hard.
For those hearing this anecdote for the first time, it will hopefully elucidate a mistake I was making — and many business people make.
I like to run an efficient operation, with no wasteful or overpriced spending or expenses. With this in mind, I was shopping about year ago for store supplies. This particular day, my attention was on garbage bags. We use a bunch of them. You gotta put trash in something right?
The only thing about garbage bags is they are not revenue generating. So my goal was to minimize the expense of the garbage bags. I was shopping at the warehouse and saw the garbage bags I have been buying for years. These bags are 55-gallon, thick bags. They have worked great. To the left of them, I saw a smaller, lighter weight bag that was about 15 percent cheaper. I bought these lighter weight bags. I put them into circulation and thought nothing about it.
About a week later, I got a report that the bags were too small. The employees were now changing the bags 2-3 times a day. Usually we change the garbage once a day (unless we are really busy). Not only were they changing them more often, but the bags were ripping as they pulled them out of the garbage cans. Finally, one day, I was in the store with one of my managers, and he looked at me and said, “What are we going to save, $3 a year?”
At that moment, I realized how ridiculous I was being with the bags.
It is only natural in lean times to start looking at the expenses and where you can make some cuts. Usually the first thing people cut is staffing levels. One area I never consider cutting is ingredients or anything that would adversely impact our mission to deliver the best products were can.
Some businesspeople I know will cheapen or lower their product quality to save money. This is truly being pennywise and pound-foolish.
The point of the story here is there is salvation. That salvation is in sales. Stop focusing like I was — on garbage. Coming up with a new promotion or otherwise working to boost your business and grow sales will do more to make your life better than buying cheaper garbage bags.
Salvation is in sales! It seems obvious, right? But I cannot say it enough.
You, too, should repeat it to yourself.
The other thing I have learned, is if you are going to shop anything, don’t shop your garbage bags. Shop your insurance; shop your accountant, the bigger ticket line items. Break out your profit and loss statement. If you don’t have a profit and loss statement, just open your checkbook and look at the largest checks you write.
Analyze those expenses, and you will save thousands instead of dozens of dollars. If you stop in for an ice cream anytime soon, take note of my garbage bags. They are spectacular!