Is penny-pinching costing you money?

by Leo Wiles
24 November 2017

Confession: I have a bargain basement mentality.

I blame this on a frugal childhood in Tassie during which it was mandatory to turn off lights, eat everything on your plate, have ankle deep baths and wear an extra jumper if you were cold. It was all about saving money and cutting corners.

But as an adult, I’ve learned the hard way that penny-pinching – especially when it comes to certain stuff – just ends up costing you more in the long run. Think cheap pens that leak, el cheapo garbage bags that tear at the most inopportune moments and inferior staples that mangle an expensive Xerox machine (true story).

Yep, it’s oh so true that you get what you pay for, particularly in business. So here’s what I would recommend not skimping on if you can help it.

Cheap printing A freelance remedial massage therapist pal of mine ‘saved money’ by designing and printing her business cards through a mainstream online company.  Although she has positioned her services as being high end, the cheap paper stock, bad layout and colour mismatch didn’t match her company message. I convinced her to pulp the cards and do a value-in-kind deal with a designer friend with a sore back. The new cards were gorgeous, better positioning her to the right clients. Win-win.

Cut rate services Earlier in the year I came unstuck at Officeworks when I decided that laminating my marketing material for $7 would be cheaper than paying an extra $25 to the firm printing my posters. I actually cried when the bubblegum-smacking saleswoman shrugged, told me that the trapped air bubbles and dust from their rolls sometimes happened, and that she would discount the laminating by 50 percent. I ended up pay an arm and a leg to fast-track the reprinting of the damaged posters AND an overnight courier to deliver them on time. Ouch.

Ultra cheap paint I always buy the best paint I can afford for my home office. Not only does it make it more pleasurable to work there, on application the smell is less, it takes fewer coats to finish the job and it tends to look better for longer. Also, being better quality I can wash off the daubs of pen, paint and little sticky finger marks that invariably occur when the kids visit me ‘at work’.

Not outsourcing Since a wrist operation forced my hand, pardon the pun, to outsource my pool, garden and cleaning needs, I’m finally seeing these services as in investment instead of a wasteful extravagance. Not only does my fab pool man get the chemical balance right (a feat I never seemed to achieve), he’s much faster than I am and it leaves me free to spend those hours working on my business and earning more money than it costs to pay him. It’s the same with my wonderful accountant Tom Winder (who offers special deals for our Gold Members), who deals with the ATO, ensures I get everything I’m entitled to and keeps me in the black. I don’t have the time or the expertise to do it and when you’re freelance your most valuable asset is your time. You simply can’t buy more of it.

Knock offs Buying bargain smartphones, watches, cameras, animal flea treatment even a blender online may seem like a no brainer – I mean, who doesn’t like a set of free steak knives and a huge saving? However, it can end up costing you more as often the product comes without a warranty or access to customer service. If something goes wrong, you and your dodgy toaster are, well, toast.

Bargain basement computers Given that computers, laptops and hard drives are our office workhorses, this is no time to be stingy. Last year a small business owner friend of mine bought herself a bargain laptop for under $400 only to unpack it and find that it didn’t come with an operating system, had a limited amount of ports and no CD drive. To add insult to injury it also ran slowly and won’t deal with the thousands of product shots she had expected to store in its internal memory. With a bit more research she could have hit the ground running with a reliable fast functioning computer that would have cost a little more but offered better service with a longer shelf life. Even a refurbished Mac from Next Byte would have been better than the headaches her disastrous bargain is delivering.

Skimpy insurance Even though it costs more and my 2006 car is old – in car years! – I have comprehensive insurance, which has more than paid for itself, especially when I suffered some expensive malicious damage. At home, I have a bells-and-whistles policy that includes accidental damage coverage, and while it may mean paying more each month than a standard policy, it’s worth it – as I learned when my toddler poured a glass of water over my MacBook Pro and iPhone, killing them both. The NRMA came through with new replacement models within ten days.

Super saver flights When booking a flight look at the total cost of the trip, not just the ticket price. I found this out the hard way recently when I realised that bringing luggage, choosing my seat and having a snack on board were all ‘extra’ that added up to more than their competitor’s tickets. Kaching!

Dodgy software Knock-off software not only has legal ramifications, but can add huge costs to your working hours as you try and recover corrupted documents, remove a virus or replicate previous edits.

Crappy cheap furniture I may be in the minority when it comes to enjoying putting flat packs together, but I’m sure most of us agree that inexpensive furniture made largely from sheets of MDF is only good as a quick fix. Before long, it’ll need repairing or replacing. Which is why I suggest you splurge on the office furniture you really want, guilt free, knowing that paying more upfront for an ergonomic chair and desk makes far better financial sense.

Has skimping cost your business money in the past? What do you always pay full price for?