Purchasing for your business is inevitable.
But are you getting caught in the trap of using excess time and resources to save a couple bucks?
It happens all too often.
“If I just search for a better price, it’s worth the effort. Right?”
Wrong.
When I briefly worked for a Fortune 500 company implementing technology into businesses, some of my clients would boggle my mind when it came down to making decisions.
They would spend hours researching on the web between buying from my competition or me… for the same product.
Most of these times would be because of a price difference under $10. While I will agree that $10 is $10 and these decisions can add up to a healthy sum of money, what could those two hours be better used for?
Here is an example that I encountered far too often:
You need to update your marketing department’s Adobe software, you contact your trusty old supplier XYZ Software and they quote you $1750, (this is already $200 less than you paid for the last software version).
You being a savvy buyer decide to browse the web for a better price. After 30 minutes of “googling” you find a discount software site that has everything you need, for $30 less.
You think to yourself, “excellent, I just saved $30” … not so fast! What about shipping or tax? Damn. On to the next store.
A short while later, you find a new place to purchase the item. You add it to the cart, and find it is free to ship with no taxes taken out, nice!
Three hours, thirty dollars
Okay, so you just saved $30 by going with the online discounter but what did it really cost you? You spent a total of 3 extra hours shopping online (searching for the discount software store, reading their FAQ, making sure the site is legitimate, creating an account, checking out, confirming via email the order went through, and probably getting distracted more than once with other useless sites on the web)
What else could have been done in those three hours?
This is where a little economics sense pays off in this scenario; lets take a look from the outside. Three hours to save $30, that is $10/hour, how much do you make on average? I’m guessing it is probably more than $10 an hour.
What if we multiplied this scenario out over the year: 3 hours a purchase, 2 times a week, over 52 weeks equates to over 300 considerably less productive hours a year.
With this example, you spent 300 hours to save $3000, pretty ridiculous use of time and energy for an entrepreneur if you ask me.
So should you blindly trust your main supplier? No, far from it! But what this scenario does illustrate is that a successful entrepreneur creates a system for purchasing that can save money with the smallest use of time.
Keep an eye on the big picture. As an entrepreneur you have but one job: building your business.
Do you have any examples of this? How have you created a system for researching and purchasing equipment and supplies for your business?
About the Author: Bradley Gauthier is co-founder of New Methods. And is passionate about helping big thinking entrepreneurs achieve their dreams. He has been a serial entrepreneur since the age of 12 when he created an online marketing firm. Connect with him on Twitter, Google+, LinkedIn & Facebook.
