Frugal To A Fault

I am sure you know many people who are frugal.  They do not do much, they get buy with the least of everything - one pan, two sets of clothes, simple foods, and do not drive.

The frugal concept in business is used to conserve cash and keep prices low.  The frugal difference between a person and a company is that a person is alone and a company is group of individuals.  The individual that practices frugal living can make his choices quickly and not impact others lives in a big way.  In a frugal company it is not that simple.

The leader of a frugal company cannot be the lone believer.  They must have the support of the organization to be frugal otherwise people become zombie employees who care about nothing.

Imagine a CEO who spends time saving printed paper to reuse the back side of the paper, or spends hours and days searching for the best deal on the smallest items, and even goes through buildings to find rusted, wasp nest infested conduit to use in wiring equipment.  In today's world a CEO must be frugal, but keep in mind how your employees view these actions.  The top paid person is spending $50, $100, or more dollars an hour on these activities - which costs the company and does not add value.  I do not dismiss the concept of setting an example, but be cautious of stupidity.

Remember that everyone watches the leader and scrutinizes their actions.  The value of being frugal with dollars can lead to the loss of business, growth, and good people.  Keep a strong balance sheet, but make sure that you are always making investment in your company by spending dollars on training, process improvements, updated equipment, and offering an employment package that attracts the best and brightest.

Flickr photo by NotAgainFarm