How Much Money are you Throwing Away?

August 16th, 2016

We all love a bargain and of course, we all know an eBay queen; don’t we? I do. A conservatory, garden house and a beautiful leather designer sofa for around £500 – all 3 items were £19,500 less than shop prices.

Certainly she’s a savvy shopper. She had an end goal, made a plan, set a budget, decided where to look, started her search, sourced the product and negotiated the deal.

What she didn’t do was panic, rush it or end up with something she didn’t really want. To adapt a well-known quote ‘purchase in haste, repent at leisure’.

Business purchases are not different; define the objective, make a plan, set a budget, source suppliers, negotiate; but only compromise if you absolutely have too.

My Dad was a dealer and his goal was always to buy right – at least 2 out of 3 times. That way he’d be on the right side of the deal and a much better chance of making profit. He always had a plan.

Business purchases always spend your profit, but they don’t always return a profit.

  • Stock and materials are cost of goods sold so you must make a margin on this. You need to be a savvy shopper, always looking for the best deal, buy right or better than last time is the key here.
  • Stationery, fixtures & fittings, paper towels, etc. are overheads so they are taking profit from the bottom line. Usually a small figure but one that must be controlled; a purchase order process is crucial to avoid waste.
  • Plant and machinery, premises are asset purchases so you’ll need to make sure that the asset can generate sufficient profit (savings or improved production) to justify the outlay.

So before you get the credit card or cheque book out make a plan. Decide what you want to achieve, set a budget, make and then execute the plan. Stay in control, don’t jump at the first one, make sure that you’ve reviewed options, and then decide.

Above all, if your team are spending your money, then make sure you have some controls in place.

 

Related Posts: Are You Paying Too Much?

Download my new e-book
"7 Signs That You Are a Grown Up Business"
and also receive
"Nine Essential Skills of Problem Solving"
plus my free fortnightly business tips.

Here's what else you will get for free right now...

  • Business Success- It’s all about Confidence book
  • A free Skype coaching session
  • Fortnightly business tips

This offer is limited to this month only

100% privacy, I will never spam you!

coachSME88

coachSME88

Shirley Mansfield is a highly experienced business coach & mentor. With over 25 years’ experience, she founded CoachSME in 2011 to work with business owners to maximise growth, and she is still trying to reduce the 18 handicap! Keep up to date by following me on Twitter and Google+.