My wife constantly raises eyebrows when I look for ways to save small amounts on daily purchases, but I stubbornly refuse to change my mind. Why?
I can build on this hyper-efficient mindset to optimally execute 8-figure purchase deals and 7-figure annual costs if I constantly optimize my small expenses. The same percentage savings on larger transactions can be substantial.
As a small business owner, I cannot afford to let complacency sink in. Staying lean is not an option. I write checks for $1000s daily. Home Depot and Menards purchases run into the $ 100,000 annually. Other expenses combined run into seven figures. We take on distressed properties and bring them to compliance. That requires us sometimes to replace stairs, balconies, heating, sewage, plumbing and electrical systems, roofs, and driveways, amongst other aspects of apartment living.
We must constantly evaluate buy vs. rent, in-house vs. contractor work distribution, volume vs. individual, deal opportunities with specific vendors, and other considerations that come to mind only when a frugal mindset is always in play. I still drive a barely $3000 SUV to my real estate locations so that the employees, contractors, and customer base vividly understand that we seek rents and look for lower costs “justifiably.”
When we work for someone else, we tend to focus on our immediate responsibilities within a Fortune 50, 500, or 5000-sized organization. Cost optimization is the least of our concerns, except for staying within our employers’ existing policies. But if and when it is time to venture out on one’s own, transitioning from a business-class, 5-star lodging travel to a more modest setup can be a challenge.
When you make the transition, I hope you can see why I won’t spend $1 more on one transaction but 6+ figure times more on others.
In closing, I would like to share an incident I encountered while reading about the legendary Warren Buffet’s way of thinking.
Warren [Buffett] was playing golf at Pebble Beach with Charlie Munger [Berkshire Hathaway’s vice-chairman], Jack Byrne [chairman of Fireman’s Fund], and another person. One of them said, “Warren, if you shoot a hole-in-one on this 18-hole course, we’ll give you U$10,000. If you don’t shoot a hole-in-one, you owe us U$10.”
Warren thought about it and said, “I’m not taking the bet.” The others said, “Why don’t you? The most you can lose is U$10. You can make U$10,000.”
Warren replied, “If you are not disciplined in the little things, you won’t be disciplined in the big things.”