I used to own a brewery. In our rural location and with our small customer pool, we struggled to be profitable.
My partners and I disagreed about how to best approach profitability. One had an MBA and swore by the neo-capitalist, Econ 101 approach to maximizing revenues. Following this popular approach, we were unable to generate returns on the money we threw at advertising, marketing, and solicitation.
Though I was the introverted partner, I eventually mustered the courage to try my own approach to breaking even. I guess I finally got sick of being on yet another sinking ship. Instead of following some scripted approach to capitalism, I did what made sense to me.
I figured there were two basic elements to business: revenues and expenses. As we were throwing money away trying to increase our revenues, I started to examine the expenses column.
In short, over a period of just a few months, I was able to decrease our monthly spending from about $50k to $15k. And guess what? A big chunk of that difference was profit.
In short, I helped us grow smaller.
Of course, my partners couldn’t process what I had done. They also couldn’t let go of their attachment to ‘traditional’ economics. The business continued to spend money that would never generate a return.
Luckily, this impasse facilitated my exit from the partnership. And from the mountain of debt.
Oh well, I tried.
More importantly, I learned something.
As I look around the globe I see partnerships very similar to my brewery experience. Everywhere folks are throwing money at maximizing profits, believing there will be more coming in than going out.
Even in our household budgets. The literal ‘home’ implied by the prefix ‘eco’. Many of us struggle to keep the expenses column shorter than the revenue. And though it sounds simple to do, it is surely not easy.
I remain convinced, however, that growing smaller is an approachable solution to many individual, family, and business problems we face today.
Stop obsessing over the expenses column. You really can’t control it.
Kind of like how you can control how you react to things but not to other people’s reactions.
A long hard look at expenses can reveal the difference between wants and needs. I think all of us could decrease what we spend. And simplify our lives.
I hope you enjoy this episode. Thanks for reading, listening, or watching.