Planned Purchases Perform Better

You have to “speculate to accumulate” to improve your business. This is an old adage of business but this has also led to the downfall of many businesses. Keeping control of cost is something all business people have to do.

One key area of keeping control of your costs is in the purchasing of new equipment. There are many salespeople trying to sell you things that you do not need or do not need at that time. Don’t impulse buystrategically buy. In a small business it is very easy to buy things without costing them.  Costing and research is very important and does not have to be long-winded or costly but failing to do so could be costly.

Over stretching yourself can soon bring your business a cash flow problem, particularly if the new equipment is not getting the return you expected, so you must consider what you expect from any purchase.

Think through the idea from start to finish.  Don’t think it cannot happen to you – even the experts get it wrong.

Governments and local councils are particularly apt at making these mistakes.  In England they planned, budgeted and built a beautiful bridge which was also the longest suspension bridge in the world at the time.

Part of this project was to build a motorway up the east coast of England, easing traffic on the congested A1 & M1 Motorways and diverting traffic down the east coast through Yorkshire and Lincolnshire, opening up new opportunities and breathing life into this isolated region. They also went to the cost of converting parts of the counties of Yorkshire and Lincolnshire into one county which they renamed Humberside.

The Motorway has never been built and about 20 years later they changed Humberside back to their Yorkshire and Lincolnshire origins.

The whole area is in deep recession paying for a bridge that can never pay for itself  because of the low volume of traffic it receives and the interest payments alone have cost millions (partly causing the recession).  Business fuel costs are greater because of the distances and slower roads. All of this is keeping the area depressed.  It would have been better if the bridge had never been built and to add insult to injury, one of the poorest parts of the country pays one of the highest fuel (petrol/gas) prices in the country having the extra cost of transporting the fuel on poor roads.

Hopefully your purchases will help your business but be careful and try not to impulse buy – always strategically buy and plan carefully.

If one item is linked to another, be careful to buy them in the correct order and make sure you will be able to buy the other items later and therefore not making the item you have just bought redundant or not cost-effective. This is a very common occurrence and it is a balancing act that all businesses have to deal with. That is if you do not want your very own white elephant.

Following good practices will improve your business.

Get my blog posts delivered by email

2 thoughts on “Planned Purchases Perform Better

  1. Well put! You have to speculate to accumulate profits. I have many times over speculated, but it is still essential to business focus and online profits. And for money to change hands, we need to sell something 😉

Leave a Reply