I recently overheard a business owner tell his employees his philosophy on spending money. "If we need it, buy it. If we don't need it, don't buy it."
Sounds simple, right? After all, a need is a need and a want is a want. Conventional wisdom says this is the right way to think. I couldn't disagree more. I think it's short-sighted and self-defeating. Here's how I direct our team: "If it adds more value than it costs, it's probably worth the investment. I don't care if it's a want or a need."
"Adding value" is subjective, which is why most people don't use this as the standard. What does that even mean? Sometimes it means creating efficiencies that save money elsewhere. For example, if we spend $500 on equipment that saves 30 minutes of labor per day, it will pay for itself in no time! Was it a need? No. Does it add value? Absolutely.
Sometimes, it means eliminating brain damage. If I see my team beating their heads against the wall, investing money to remove that friction point can improve culture and invigorate the team. Was it a need? No. Does it add value? So much!
Sometimes, it means opening the door for more growth. If an expense increases our production capacity and subsequently leads to more revenue, that's a major win. Was it a need? No. Does it add value? In a very tangible way.
Sometimes, it means offering the customer/client a better product or experience, creating more perceived value in the products we sell. Was it a need? No. Does it add value? Oh yeah, it does!
Sometimes, it means simplifying a process, perhaps removing steps, which reduces the probability of errors or burnout. Was it a need? No. Does it add value? Immediately!
I'll share a few examples from Northern Vessel to give you a sense for what I'm talking about:
Our team doesn't clean the shop at night. Instead, a professional cleaning crew comes in every night for a full clean. This eliminates the need for our team to do their least desired tasks after a busy day.
We hired a full-time prep person whose sole responsibility is brewing cold brew concentrate, batching cold brew lattes, and preparing retail fridge bottles for the next day. This investment lets our baristas focus 100% on serving our guests.
We use some of the top-rated (and most expensive) coffee in the country. We also spend 2x on our beverage containers by serving our drinks in cans instead of traditional cups. Both decisions lower our margins, but lead to an overall better experience for our guests.
We replaced our original expensive espresso machine with an even more expensive espresso machine. This move allows us to serve guests faster and more reliably.
None of these expenditures were needs, but each added far more value than it cost.
This principle works in business and at home alike. It shouldn't always come down to need vs. want. Instead, we should start framing our decisions through the lens of how much value it creates compared to the cost. This strategy will transform your business, your work, your home, and perhaps even your marriage.
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