BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

For Small Business Owners, Revenue Earned Is A Horrible Asset To Waste

For those who work hard to attract high-paying clients, heed the fable of how a hungry grasshopper begs for food from an ant when winter comes. The situation sums up business lessons about the virtues of thrift for the future.

For the regular business rank and file—the subchapter S entrepreneurs, agency owners, consultants, business coaches, small business operators and sole proprietors—every dollar spent comes with a lineage that can be traced back to its source. That dollar spent must first be earned, according to Fortune 500 and big agency marketing expert Alf Nucifora.

“Remember what you have to sell in order to spend a dollar,” said Nucifora in a phone interview. “Think five to 10 times more if you’re operating on standard margins. Then reconsider the purchase. Viewed through that prism, cheapness becomes an accolade rather than a badge of derision.”

Cheap is such a harsh word; I prefer frugal. As another business mentor taught me, when you own the business every dollar you don’t spend you get to keep. Like the Aesop fable of the ant and the grasshopper, you might need those dollars one wintry day.

“While headlines scream of wealth gone wild—tech billionaires with multiple private jets, ostentatious 7-figure wedding receptions for favored daughters, massive yachts demanding millions in annual running expense—one has to view these outliers as akin to animals in the zoo: an interesting species, flamboyant in behavior, if not in plumage, but demanding of nothing more than voyeuristic interest,” said Nucifora.

Nucifora is the chairman and founder of LuxeSF which incorporates all of the Bay Area including Carmel-Monterey, Silicon Valley and Napa-Sonoma. Currently, he also serves as principal of a marketing consulting firm. We met before he “retired” from the responsibilities as chairman of the Southeast office of a $310 million advertising agency in 1990.

“As a practicing small business owner and operator for more than 30 years, there are basic commandments of spending behavior that should be taught at an early age, as an antidote to the relentless consumption messaging that permeates mainstream marketing communications and popular media entertainment,” said Nucifora. “Take it from a still-working Boomer who once spent with abandon because it felt good: I wish that many of those profligate dollars could now be clawed back.”

Here are several reasons from Nucifora for managing with frugality:

Perfect information doesn’t exist. “So, stop trying to seek it or buy it. Be willing to make a business decision based on available information and your own accumulated wisdom and experience.”

Beware the creeping break-even. “It’s an old business prof’s admonition. It means you’re always striving and promising to reach profitability, with the best of intentions, but spending lures always seem to thwart those intentions.”

Appoint a Scrooge. “We have our Scrooge and proudly promote her brand. She’s a constant pain and her need for spending justification drives the sales types insane. But she saves us a fortune. And, she provides coverage for those situations where we’ll offend by saying no to people were scared of offending.”

Take care of the pennies and the dollars will take care of themselves. “A prominent regional bank CEO always checked the lobby desk on his departure each day to see how many FedEx packages were stacked for pick-up. Inevitably he found that many could be sent by post, saving hundreds each week and thousands each year.”

Micromanage with skill. “Micromanagement has developed a bad rap in recent times, as the tech Wunderkinds preach at 30,000 feet about the view, big and long. Remember, God is indeed in the details, particularly for small business where every customer and transaction really count.”

Do your homework. “Be willing to price shop. That’s the beauty of the internet. Someone is always offering a better deal or a cheaper price.”

Go for the repeat dollar. “Yes, we need new customers and new dollars, but repeats are easier to acquire and deliver more profitability. Yet most of the business world, service industries in particular, forget the customer relationship once the initial transaction has been completed.”

A native of Brisbane, Australia, Nucifora entered the advertising and marketing business on the corporate side working for two Fortune 500 companies, first in Australia and then in the United States. He then made the move to the advertising business and later advanced into agency management.

During his career, Nucifora has learned that waste is a state of mind. “It’s endemic and built into most business DNA, like the realtor who pays hundreds in parking fines each month because he can’t find a vacant parking meter and considers it an operating expense,” said Nucifora. “Understandable behavior, but hardly worth emulating.”

Follow me on Twitter or LinkedInCheck out my website