Is Frugality a Virtue in Business?

In this economy, every business owner wants to minimize
costs and maximize profits. It’s instinctive to look for ways to spend less
money by cutting costs, cutting out whole line items in the budget, to be sure
critical expenses, like payroll, can be met.

However, for small business owners, entrepreneurs, even sole
proprietors; that approach is often pennywise and pound foolish’. Too many
small businesses, have wiped out their marketing budget, their training and
self-development budget, never mind the small expenses to keep their guerrilla
marketing efforts moving forward. Too late they realize, their sales funnel is
empty because without marketing, no one knows what they have to offer, or even
that they are still in business.

You need to look at those marketing and sales expenses
differently. Marketing and sales are profit-generating investments you make
upfront to drive sales. There’s a big different between: a. spending your
entire investment budget on a onetime 30 second spot on the Superbowl or the
NBA Playoffs(I know someone who did!), and b. a strategic marketing budget laid
out for the year and tracked, so you can make adjustments in response to the
market. In a tight economy, I would forgo the former and persist with the
latter.

Where frugality is a virtue in dealing with your personal
finances, it is very often a vice in business finance. If you allow frugality to
undermine profitability, your business will move in the wrong direction. Don’t
let it.

In contrast to your household, your business must spend
money to make money. In business, you want to think about how you invest money,
where you invest money. You need to ask yourself the question all the time,