I quite often tell my clients that they need to ban the word “cost” from their vocabulary.
Because I don’t think anything in your business should be a cost.
Everything should be an investment.
That might sound like semantics, but changing the word changes the way you think.
Ask:
“How much is this going to cost me?”
and you’re thinking about the money leaving the business.
Ask:
“If I invest this money, what return am I going to get?”
and suddenly you’re asking a completely different question.
What return are you getting?
If you invest £1,000 in marketing, what should that investment produce?
Leads? Customers? Revenue? Profit?
If you invest £40,000 a year in a member of staff, what return should they create for the business?
That doesn’t necessarily mean they directly generate £60,000 of profit.
An administrator might give you 15 hours of your time back every week.
That’s a return.
But then there’s another question:
What are you doing with those 15 hours?
If you’ve simply filled them with more administration, perhaps that investment isn’t producing the return it could.
The same applies to software.
Training.
Equipment.
Premises.
Professional advice.
And yes, even me.
Good business support should produce a return
If somebody invests £15,000 working with me, they’ll get at least £15,000 worth of knowledge, experience, challenge and support.
But that’s not enough.
I want that investment to produce a return.
If the work we do together helps their business generate another £30,000 in profit, they’ve invested £15,000 and generated £30,000 of additional profit.
That’s a 2:1 return on their investment.
Most of the time the return is significantly higher. But the principle is the same.
Which is why “How much does it cost?” is the wrong question.
It’s an understandable question. We all want to know how much we’re spending.
But the question you should really be asking is:
“What’s the return on that investment?”
Because £1,000 that produces nothing is expensive.
£15,000 that produces £30,000 of additional profit isn’t.
Stop writing off your investments
This is why I tell clients to ban the word “cost”.
Because when you call something a cost, it’s very easy to just write it off:
“That’s what we spend on marketing.”
“That’s what that member of staff costs us.”
“That’s what the software costs.”
You stop questioning it.
Call it an investment, and something changes.
You expect something back.
What is our marketing producing?
What return are we getting from that employee?
What is that software actually saving us?
And if you can’t identify a return, perhaps the problem isn’t that it costs too much.
Perhaps you shouldn’t be spending the money at all.
I’m not suggesting that every pound you spend has to produce an easily measurable financial return.
Some investments buy time.
Some reduce risk.
Some improve quality.
Some make customers happier.
Some make your team more effective.
Some simply make the business easier to run.
But there should be a reason.
There should be an outcome you’re trying to create.
Because when something is just a “cost”, it’s very easy to accept it as something the business simply has to pay.
When it’s an investment, you expect something back.
And that changes the way you think about your business.
When you think differently, you act differently.
And when you act differently, you get different results.
So here’s my challenge for you this week:
Ban the word “cost”.
Take a look at where your business is spending money and ask:
What return am I getting on this investment?
You might be surprised by the answer.
By Andy Walter
I help business owners build businesses that are easier to run, with less pressure and less stress.
Join us at the next Your Mastermind Group networking session.
#BusinessOwner #Leadership #BusinessGrowth #SME #ProblemBehindTheProblem
0 Comments