How Being A Cheapskate Hurts Your Business

Being a business owner, I can understand the need to be frugal and to watch how you spend every business dollar. I run a business where I ask other business owners to spend money. I must make a case for them spending it on the services I provide by showing the value they will get in return.

I come across some businesses that genuinely do not generate the revenues as yet to purchase a full-fledged business website. But I also come across business owners and managers that are just cheapskates, and I truly believe that the line between frugal and being a cheapskate is not that thin and is quickly recognised by others around them.

Yes, there’s a mini-rant in here.

You don’t invest in your business

Being a cheapskate does not in any way save your business money because you miss out on genuine opportunities to grow your business when you refuse to spend money on investments that provide a healthy ROI.

The most noteable areas where business owners skimp on spending are marketing and human resources. These are the two areas that can have the biggest impact on your business.

You don’t invest in marketing

Poor marketing and promotional efforts do not grow your revenues. When you don’t make the right investments in marketing and look at it only as a cost, your business suffers.

The first question I usually get from someone inquiring about building a website is “How much does it cost?” This is a question I don’t like to answer early on because all they tend to see is that its going to cost them X and become blind to what they’re getting for the cost. They totally miss the potential they have to stand out, be different from their competitors and to grow their business.

But what these business owners don’t seem to understand is that in order to grow your business, you must invest in smart marketing. You don’t have to spend a lot, but if you spend on marketing activities that have an impact, it’s worth it to the bottom line. You’ll get even more money to sit idly in your bank accounts.

You don’t invest in human resources

When you hire the cheapest labour you can find, you’ll get what you pay for. Honestly, you will. Cheap labour has no incentive to work hard, to analyze things and make recommendations. They just go with the flow and do things they way they’ve always been done. Cheap labour hates the job, will show no loyalty and will leave you at the drop of a hat for the next business that pays them slightly better.

When you don’t want to compensate your employees fairly or invest in their well-being, such as training opportunities – that you benefit from directly – it reduces employee morale.

When you’re cheap with your hiring practises, these people make you and your company look bad because there’s no effort to really please the customer. There’s nothing in it for them.

You don’t invest in serving your customers

What’s equally bad? You don’t invest in serving your customers. You have customers visiting your place of business but don’t have facilities for them, such as clean bathrooms they can use, a waiting area or proper parking facilities. Or remember those cheap employees you hired? Think about them when you go to someone else’s place of business and you are faced with employees like that.

Be frugal but don’t be a cheapskate

There’s a big difference, and if you’re a cheapskate in your business, you’ll end up hurting it more than helping it by saving on costs. Mini-rant over.

*Image courtesy Eric E Castro