Have you ever asked yourself why many people decide to spend tens of thousands of dollars on things such as weddings and cars, instead of choosing cheaper alternatives?
In today’s society, it’s a fact of life that money matters to us. After all, we spend most of our lives in pursuit of it and tightly control what we spend it on. Most people who see a penny on the ground will keep walking. The more money that’s involved in something, the more likely it is to grab our attention. For example, if a bad decision costs us $1,000, we will be far more upset than if we had lost $10.
Money is undoubtedly important, but nobody only cares about money. We all have different interests. If you care about the environment, you might feel more motivated to support a group that plants a thousand trees over one that plants a hundred.
Money is powerful, however, because its appeal is universal. And understanding the value of money is crucial in entrepreneurship.
Why should you care?
Learning is central to entrepreneurship. You need to learn what makes a product successful, what approaches win over your customers and how you can differentiate yourself from your competition. The faster you learn, the faster you can drive your business to its objectives. And understanding the value of money helps you understand the way that you learn.
When you pour tens of thousands of dollars into an initiative that fails, you will never forget what went wrong. When a mistake costs you $20, you might not mind making it again tomorrow.
Assess failures, both large and small.
It’s important to know what went wrong with those rare and devastating failures, but it’s also crucial that you learn from the common, smaller accidents, too.
You might find an example of a smaller failure in your marketing material. Something as small as the color or font on your website could be a determining factor when it comes to gaining, or not gaining, new clients. Test various options to see which one yields the best results.
When it comes to assessing failure, conducting an analysis weekly, bi-weekly or even monthly will present you with data you can use to make better decisions in the future.
Remember, time is money.
Make an effort to notice how much time you devote to failure. After all, time is money. While it is important to assess failure, spending too much time assessing it instead of testing your next theory can mean the difference between wasting time and utilizing the failure to move forward.
We are unable to win back the time we spent on our failures, but we can use our time to fix the situation and generate more money to offset the cost in the future. As long as the revenue generated outweighs the cost of our time, then it is overall a good investment.
Furthermore, if you want to save time on a project, you could outsource it and focus your valuable time in another area that will generate you more money.
Focus on the small wins.
Money doesn’t just amplify the impact of negative occurrences. You probably find yourself obsessing over your most noteworthy victories and striving to replicate them. However, if your business is like most, then it is kept afloat by the flood of smaller everyday sales.
When you understand the value of money, you also understand that it’s important to prioritize the smaller wins — they’ll add up. A good way to celebrate smaller victories with your team is incentivizing them with awards, bonuses, etc. This can create healthy competition within your organization and increase the overall effectiveness and efficiency of your employees.
Understand that it is easy to overlook small failures and victories, and recognize the importance of any sum of money for your business success. When you do, you can start to work toward putting more time and money into what matters.