Why is waste such a menace?
Because “to waste” means to expend some resource — your money or, worse, your time — and to get little or nothing in return.
And why is it worse to waste time than money? Because theoretically you can always get more money, by earning it or borrowing it. But time? Once you’ve wasted your time… it’s gone.
Luckily, three simple changes can compost your waste into new growth.
1. Pull all the needles from your spending haystack
Maybe you have an online subscription you forgot about, or even an erroneous charge. We recently discovered an annual fee of $350 and a monthly charge of $19.95 for a service we canceled four years ago! Sure, we canceled — but they logged it as a “pause” and resumed charging us later. Rest assured, we got our money back.
Take the time to routinely audit your expenses, especially all those little charges. Even pennies add up to real money that can be marshalled better.
2. Change your psychology about expenses
This is a bit complicated, but hang in there with me, because it’s worth it.
If your profit margin is, say, 10%, then for every dollar of expense, you need to sell or raise 10 times that amount. Adjusting your thinking in this way makes you see some expenses in a new light: as true hidden costs that far, far outweigh their value. That new laptop may have cost you $1200 in cash, but depending upon your profit margin it may also have offset $12,000 in sales.
Whether you’re running a nonprofit or a for-profit business, thinking about the hidden cost of expenses represents an important mindshift — you want to be effective. (The same applies for public agencies that need to be careful with public money; millions still remember the story of the $640 toilet seat the Army insisted on.)
Want to “find” more money? Figure out your actual profit margin, then start to apply this new thinking. You’re almost guaranteed to nix some expenses that generate nothing positive.
3. Set targets
When you’re meeting someone for dinner, you don’t aimlessly drive around hoping you come across the right restaurant. No, you set a target: Here’s where I’m going, and how I’m getting there, and when I need to arrive.
Setting targets is guaranteed to help you succeed.
Here are just a handful of items you can measure, with sample targets:
- Your digital advertising buys (revenue generated; Return On Advertising Spend)
- Your email newsletter (subscription growth; open rate; clickthrough rate)
- Your number of clients / donors (year-over-year growth)
- Your quality of clients / donors (per-capita revenue; churn rate)
- Your monthly, quarterly, and annual budgets (revenue; expense; profitability)
- And more….
In fact, you can measure just about everything… and should.
Because, as we all know, “Waste not, want not.”
On a war against waste? We can help.