I prefer to separate the money that I put into my business in two (2) categories. These categories are:
First, let’s look at and define our subset consisting of expenses and investments.Expenses are pretty easy to define. They are the basic items we need to run our practice. These are dollars spent to insure that we are able to adhere to the philosophy of Service, Credibility, Integrity and Profitability (SCIP®).
Expenses are things like rent, telephone, salaries, supplies, fees paid to outside consultants (i.e. information technology), professional fees, website maintenance, business insurance, health insurance, office equipment and
other things of this nature. This seems pretty straight forward but it always bears further investigation. It’s important to “shop and question” your vendors at least once per year. I think you will always realize savings when you complete this exercise. The savings increases your net profit. Expense is the biggest factor when you are trying to increase your net profit. Revenues minus expenses equal net profit.
Let’s look at, and differentiate, investments from expenses. Investments are costs associated with items that will either maintain or increase your net profit. Some investments must be made just to stay even and keep your flow of income. Others are dollars spent to get to the next level. For example, increased advertising, website enhancement, increased direct mail, client appreciation events, new office furniture or a more prestigious location and continual education. What about a new hire dedicated to a new project? What about hiring an intern? How about hiring a public relations person to enhance your position in your community? These are investments. And, there is no better place to invest than in our own business. You have the most control in this endeavor.
Earlier I mentioned deficit spending and its possible values. Just make sure you have a well thought out plan with the proper strategies and tactics to give you the best possible chance for success. People engage in “proper” deficit spending everyday. Kids and parents borrow money for college. Cities raise money through bonds to enhance and improve their communities. There are many more examples.
Money . . . it’s precious. Make sure you use it properly, for it is usually a finite asset and not never ending.
Until next time ... Good Selling!
Raymond J. Ohlson, CLU, CRC
President and CEO of The Ohlson Group and SMP International LLC