I sinfully watched costs for decades — and was labeled a "miser" by my two brothers/partners. This was deeply hurtful.
“Waste not, want not”, a famous Benjamin Franklin quote has always been my motto — to the point of driving those around me crazy. Our seasonal restoration business was slow in the Chicago winters. Therefore, it was essential to make nine months of revenue stretch to cover 12 months of costs. Creating a culture of frugality was a matter of survival.
Wasteful behaviors and excessive spending would raise my blood pressure and lead to rants about the advantages of thriftiness. Big things like labor overruns or high material costs on a given job would result in someone getting chewed out — especially when a wasteful action contributed to the loss. I remember going bonkers when cellphones first came out and were superexpensive and someone would exceed his minutes or dial 411 ($1.50 a pop) a lot.
Many say that Benjamin Franklin was the father of thrift in America. He believed industrious hard work combined with frugality helped shape a person's or a business's future. Living within one’s means and applying that savings to a future benefit were recurring themes found in Franklin's popular book, "The Way to Wealth."
For the longest time, a calculator was my third partner. In every decision I made, costs were more important than benefits. This was not always beneficial to our company.
For example, making customers happy in the long run has greater benefits than saving a few hundred dollars today. As I evolved, eventually I became more balanced and learned that growth and cost controls are equally important to a thriving business.
The American free-enterprise system is designed to give a businessman competitive pricing. Competition is advantageous for everyone.
Vendors are always working hard to gain more business through pricing and service — and I worked hard at getting the best pricing for all of our expenses. I became a master at pitting vendor’s pricing against their competition to reduce our company’s costs.
One confession I am not proud of is shorting insurance companies early in my career. Business insurance premiums are based on a 12-month future estimate of payrolls. I would underestimate my payrolls by 25 percent. And save 25 percent of the premium. Then, after the 12 months, I would change insurance companies and dodge the auditor, thus reducing our insurance expenses.
Eventually, being a "miser" became a badge of honor because past savings purchased assets that helped increase future revenue/profits. During the height of the 2009 recession, for example, we expanded and upgraded our facility by 40 percent to add capacity — half of which was paid for by savings. Here are the before and after photos:
At one family party my two brothers were laughing at my frugality. I looked them both in the eye and said with a smile, “Would you want any other type of person watching your money?” They stopped laughing and started thinking. The answer was clear.
Look for the second part of this series, "Confessions of a miser: Tricks of the trade" coming soon.