Enter The Savings Lab

Save the money?

May 13, 2021

After you have sourced your need and chosen the best supplier, do you send the money to the bottom line or re-invest the savings?   This is a common question in procurement and one that does not have a clear and consistent answer.  Like many things in life, the answer depends on what your needs are, the stage of your small business and what is the return you can expect if you re-invest the savings.

 

Let’s take it back for a minute  to when you were a kid, lets say 9 years old, and you are walking down a street with your neighborhood crew and you look down and find $20 laying right in front of you.  After looking around and seeing no one who could possibly be the owner of this precious green back, what do you do?  Do you treat your crew to ice cream at the local parlor or do you stuff the $20 in your pocket and keep moving?  

  

 

So what does your 9 year old self have to do with whether or not you drop savings to the bottom line or  re-invest?  Nothing but it highlights that decisions are not made in vacuums and dependent on your desires and needs at the time.  Saving the money to be used later has an obvious benefit because it gives you the added confidence to take some more risks in growing your small business.  The downside is that you are not putting the money to use in another project that could potentially open up new growth areas.  Putting the money to work whether it be a new computer, larger office space, expanding your marketing campaigns or hiring another sales person, could increase your capabilities but it comes with a risk that your investment will not yield value. 

 

The beauty of owning your own business is that you can make your own decisions.  The downside is that you have to live with your decisions.  In this case, there is no right answer.  You can only make the decision based on the facts in front of you at the time.  

 

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