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On Spending and Cutting Spending

You cannot cut your way to greatness. You also can’t cut your way to growth. Cutting spending is a survival strategy, not a business model. Businesses fail when they run out of money, and they also fail when they don’t make the investments necessary to grow. Countless businesses have become addicted to cutting and are ruining their business in the process.

You can’t spend your way to greatness either. You can’t spend your way to automatic growth. Without a well designed, thoughtfully directed plan for investing money, spending it doesn’t equal growth—it equals waste. It is wrong to believe that simply spending more leads to greater results. The results you seek won’t be had that easily.

When you invest in employees, you aren’t hunting for bargains. There aren’t any bargains to be had. You get exactly what you pay for. This means you need to invest whatever you have to in order to acquire the talent you need. It is a mistake to believe because you once hired well and paid less than you should have that you were any more than lucky. Your competitive advantage isn’t a place to make cuts.

Questions

When is cutting the right decision? What other choices are available that would also increase profitability?

How do you determine what investments to make in your business? Why does growth require more than just spending? What needs to accompany that spending in order to produce results?

What is the most important investment a business can make? Why do some businesses try to find bargains when they hire? Why is it a mistake to believe the amount of money paid is enough to ensure success?


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