Penny Wise dumb decisions image

Penny Wise, Pound Foolish, Lost Opportunity

I have two stories to tell you today to illustrate the reason for this tip, both of which will, hopefully, turn on that “aha!” lightbulb that resides in our heads…

Story #1:

The first story was told to me by a neighbor who has a son, Brian, thirty-something, who, as she explained, lacks the common sense he was born with. (To me, the jury is out on whether he was, actually, born with it at all….) Brian has made foolish decisions all his life, but his most recent one is quite befuddling.

Brian had phoned his mother to ask her for money because he couldn’t pay his rent.

“I don’t have any money and I had to pay the electric bill or they were going to turn off my power,” he told his mother.

“Brian – you have a decent job. You make decent money. How is it you can’t afford your rent?” asked his mother.

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Brian replied, “No, I don’t have that job any more. I lost my job because I couldn’t get to work. I haven’t worked for five months,” he told her.

“Couldn’t get to work? But you have a car! An expensive car you paid way too much money for! Why can’t you drive your car to work?” She was dumbfounded.

“Well – I sold my car because I needed the money. But now I’ve used up all that money. So, will you give me a thousand dollars to pay my rent?”

Seriously? If Brian couldn’t work and earn money without transportation, that how did he think selling his car would help? What sense did that make? In effect, Brian guaranteed he wouldn’t have money to pay his rent (or to pay for anything else) by removing his only option for transportation to get to work.

I can see why my neighbor is so frustrated with her son. (And, so you know, she refused to give him rent money and told him to find a new job and to take the bus.)

Story #2:

An APHA member advocate (I’ll call her Hermione) who is listed in the AdvoConnection Directory received her membership renewal notices, and contacted me.

“I’m dropping out of APHA and the directory,” Hermione told me. “I can’t afford the dues this year. I’ll try to join again when I begin making more money from my advocacy work.”

I replied, “Hermione! I am so sorry to hear that! Let’s talk about how you can increase your income. We want you to succeed, and we don’t want you to leave! How much are you charging clients?”

“I charge them $50 an hour. I used to charge them $75 an hour, but when I didn’t get a lot of business, I lowered my hourly rate” Hermione told me.

“Well, then, first of all – you aren’t charging enough. I’ll send you a link so you can read about that, and I suggest you take the course at PracticeUP! that teaches you how to set your rates – and why. One rule we know is true is that the more you charge, the more clients you’ll have,” I explained.

“Really? I didn’t know that! I’ll look at the article and maybe I’ll take the course, too. They sound helpful!” She seemed a little more excited.

My next question to her was, “How do clients find you? How do they know to call you? What marketing are you doing?”

Her response, “Well – that’s why I want to return to APHA when I make more money. All my clients come from the AdvoConnection Directory.”

Yes, I felt like Brian’s mother. If all Hermione’s clients are coming from the AdvoConnection Directory, then she is guaranteeing her own failure by dropping out of the directory. That makes no sense! If she sincerely wants to stay in business, then it’s a bad decision to make, no matter what the reason.

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I politely explained this to her, and Hermione saw the wisdom of keeping her membership and staying in the directory. I checked in with her a few weeks later and she had raised her rates, and had several new clients, all but one of whom had found her in the AdvoConnection Directory. Her business is growing and she’s happy.

Deciding against an expense that is a main factor in helping you maintain and grow your business is folly. Granted, if you need to cut corners in one way or another, it might at first be tempting because it’s easy not to spend that money.

Instead, I recommend that any time you decide to cut corners or even to invest in a large expense, first do an assessment of how it will affect your bottom line. Will it make a contribution and help you improve your efficiency and/or effectiveness? Or will it stand in the way of your progress by eliminating opportunities?

Need help making that assessment? Reach out. There are many people who are willing and able to help you. Post in the Discussion Forum, or contact your local SBA or SBDC. They will all be very happy to help!

Wise business decisions will make all the difference in the world.

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