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Saving Money IS Making Money

Saving Money IS Making Money

It is a simple principle: Saving Money IS Making Money.

When it comes to making money there is no faster way to do it than to hold on to what you have already earned.

We’ll discuss that for sure, but hold on because there is more to it than simply holding on to what you have and we’re going to discuss that as well.

A Penny Earned

You’ve heard the adage “a penny saved is a penny earned”, which is true, but would you consider that holding tightly to a dollar may also mean saving your company from the brink of bankruptcy.

When you consider that every ten dollars spent that could have been saved requires you to sell another thousand dollars if your profit is 1% it makes perfect sense that saving a dollar goes a long way. Now that didn’t mean so much in the past as it does in a year like this when so many garden centers are way down in sales volume. It is a big deal now, but only if you made the moves to save the pennies and dollars earlier. While this information is too late to help you this spring, it sure says something about how to set up for success – in both up and down sales years in the future. Spend less and more likely save your skin.

On that topic, Bob Ferda, co-owner of Ferda’s Garden Center said last week that while his sales are downdue to the crazy weather this May their expenses are also way down due to changes they’ve made over the past two years. The result is that their bottom line has improved greatly. Sales being down doesn’t create the greatest feeling in the world, but it sure feels much better than it would have if expenses hadn’t been reduced. Bob says he only wishes he’d been involved with The Garden Center Group and started working with us on these issues sooner. At least it wasn’t too late Bob! And thanks for permission to tell this. It will give hope and encourage someone else to have the guts to do what you have been doing.

When you are trying to earn confidence from your banker to renegotiate how you will repay their money this type of savings can make all the difference.

Summer is for Saving

Summer is a terrible time to make up sales, and for that matter it isn’t much better for spending less because you’re probably not spending that much as it is. However, it is a great time to plan to save money when you spend the most – in early spring. Mobilization for spring costs a garden center a ton of money. If you’re a retail-grower the costs not only escalate, they come earlier and in larger amounts. Taking the time now while it is fresher in your mind than later “in the winter” is the best way to figure out how to save money when you’re spending the most. This is only scratching the surface on saving money but it is the STRATEGY for saving that you need to embrace first.

Creating a Culture of Frugality

This is easier done than said. Involving your staff in the strategy of saving money is way more effective than trying to do it yourself. First of all they see waste first hand on a daily basis. And in these times they know that if you keep wasting money their job is at risk. Again, this is the one and possibly only time that it is actually easier done than said. Just bring them to the table and ask them how to save money. And when they start talking keep your mouth shut and listen. Next, have your staff invite your vendors to come in and take a look around and give you ideas for saving money. Again, be there, but keep your mouth shut and listen. Now at some point you might hear someone come up with a crazy idea like buying something so you can save money. That is not at all an all-bad idea by the way. More on that later.

Saving does not always mean NOT SPENDING

Choosing not to spend money to save money is perhaps the costliest endeavor you can take on. For example, watering systems reduce labor requirements. No they aren’t perfect and don’t eliminate hand watering. Yes, it costs a little to put in a watering system, and yes you have to manage it and cover what it can’t. But it is still more expensive to hand water without the aid of a watering system. There is cost savings is in the wages that  you save, and there is also savings of the “opportunity cost” of  having a key person tied up watering when there are customers to help buy stuff.

It is just INSANE to pay the cost of additional wages, plus the opportunity costs of not taking care of customers when you can, yet so many of you are doing it again this summer. You are probably also watering more plants than you can sell before you have to pay for them, adding cost instead of value to your customer. This money can also be fixed by planning how you will not do that in the future.

Going TOO Far With Frugality

Another client recently told me about a conversation he had with a business friend of his over his referral to call us for help improving their business. When his friend asked the proverbial “How much does it cost?” question, he answered, “It only costs when I don’t do what they tell me to.”  He was right of course, but the bigger picture is that he would have wasted less and made more money if he had hired us years earlier. Unfortunately in this case I’m withholding the clients name because they waited a little too long and are going to have a tough time making it through this year. At this point his bank holds all the cards. But at the very least he can tell them where he went wrong, and what he will do to turn things around.

I won’t apologize that this has been a self-serving paragraph because it is exactly what you need to know.

What are you doing to reduce costs and to capture opportunity?

When you can’t save enough money to make a difference, (like in summer) what are you doing to capture opportunity rather than let it slip through your fingers? Or maybe a better question is this – What SHOULD you be doing to capture opportunity? No, the best question is this:

“What WILL you do to capture opportunity you are losing?”

If you’re not quite sure this may be a great time for a conversation. My number is 888-339-7456. We don’t work for free, but we do pay for ourselves by helping clients save money and take advantage of opportunities they are not capitalizing on. And we’re willing to share the risk with you. Ask how, but…HURRY before you run completely out of money. It takes some money to make more money. Be sure you are investing what you have where you need to.

To end this on a positive note…a Cambridge MA study showed that for every 1% increase in positive attitude earned a 2% increase in revenue. What can you do today to create a positive can-do attitude among your associates?

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6 Responses

  1. Great article Sid, but I think your math is a little fuzzy. If my profit is 1% I only need to sell $100 to make that dollar back, not $1,000. It’s hard enough to make a buck these days. Don’t make it look even harder than it is. 🙂

    But it is nice to have a positive cash flow, even in down times. Between the economy and the weather the last three years have been rough. We have just come through the coldest May on record… and one of the rainiest. And it is still rainy and cool as I speak. But despite that, we have not had to borrow any money for operating the last two years. It hasn’t been fun, or easy, but my Dad always said “It’s hard to go broke if you don’t owe anybody money.”

  2. Thanks John. I was in the midst of changing that around and didn’t complete it. You WIN for being the first one to catch it.

    I was in the midst of changing it to “ten dollars” and a “thousand dollars” because I didn’t think many people would bother trying to save just $1 any more like most people won’t pick a penny up off the floor nowadays. And also that one hundred dollars might not seem important enough.

    You are in an enviable position on borrowing. Your dad was a wise man, and you are as well for learning that from him.

  3. Read the book ‘The Millionaire Next Door’. I stoop to pick up pennies all the time and teach my children the same. It pays off to be observant. I have found many dollar bills and other higher denominations laying on the ground, including a $100.00 bill once. It helps to know where to look which comes from experience.

    Same goes for our garden center greenhouse business. I have found many dollars of savings in the past couple of years!

  4. Thanks for commenting Tim. It is rare that a financially wealthy person either inherited or was given their money. Anyone that thinks the wealthy were born with the silver spoon and given a trust fund think again.

  5. John Crook, Sid might have been correct to begin with. The future is uncertain and hidden costs eat us alive.

    Your dad was correct.

    About picking up pennies: I’m always looking around my feet. Picked up a dime yesterday. Once I picked up a few dollars blowing in a parking lot. A few months later when walking with my niece near M street in D.C., she mentioned it and asked how I did it. At that moment I spied a $1 bill on the ground, snatched it up and said, “Just like that.” You should have seen the look on her face. No joke. True story.

    But picking up cash is only supplemental. Earning is better and saving is almost as good.

  6. Great thoughts John Marshall. Moments like that are what cell phone cameras are made for. If only we can get used to the idea. It will come.

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