Why Simple Is Better When It Comes to Business

by Don Smith

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It's New Year's Eve, and I'm a little bored, so I decided to write this article. I've answered a few emails and taken a few calls, but other than that, things have been relatively quiet on the business side.

Meanwhile, I'm selling a steady stream of my workbooks. That's a very hands-off thing; they click on an ad, buy the e-book, and download it. None of my time is required.

Asking the Wrong Questions

I do some business coaching, and most of the business owners I work with have made things too tough on themselves. Most new owners are used to being consumers and employees rather than owners, so they ask the wrong questions like:

“How much can I make per hour?”

“How can I save money?”

If you're asking those questions, you'll never start rising to the level of successful owners like the founder of Amazon, Jeff Bezos.

Jeff Bezos Made More Than a Billion Dollars an Hour One Day This Year

Jeff Bezos' net worth reportedly increased a record $13 billion in one day.

Bezos is a hard worker, reportedly clocking in 12 hours 7 days a week in the early days of his business, although he's eased off these days. So let's say he worked 12 hours that day. $13 billion divided by 12 hours, that's over a billion dollars an hour. Not a bad payday. 

Granted, Bezos is an outlier, and I certainly never expect to be able to pull that off in my business. But my point is that if you're still selling your time, you might make a decent living compared to your peers, but you'll never build a large company.

Bezos did work hard, but ultimately the reason he's successful is he created value for his customers, and nearly everyone uses Amazon now to quickly get products. Creating a platform everyone wants to use is how he made a billion an hour, he has separated his time from his income.

Saving Is a Slow Way to Get Wealthy

Most of us have heard things like cut out the Starbucks habit if you want to build wealth. That's great; $5 a day times 300 days will save you $1,500. Who wouldn't want $1,500? Invest that every year for the next 30 years at a 10% return and you'll have $272,915. Not bad.

Not shabby for saving $5 a day and investing it

Successful Business Owners Focus on Increasing Sales

Successful business owners think a little differently. A Starbucks' owner is wondering how she can sell more cups of coffee in a day. If she can get 250 customers to plop down $5, she's just made $1,250 in a single day.

But what if she spent $500 a day in advertising and increased that to 500 customers a day? Now she's got 500 * 5 = $2,500 in revenue. Take out $500 in advertising costs, and now she has $2,000 in revenue.

In that example, our business owner nearly doubled her income BECAUSE she spent an extra $500 a day.

See how that differs from those trying to save their way to wealth?

She has to spend money on rent, employees, taxes, and equipment, so that's not all money going into her pocket, but it's still a very different outlook from a consumer. Still, at a 15% margin, that's $300 a day which could be invested in the stock market or back in her business. Imagine that invested at the same return that the saver is investing.

Investing $300 a day 300 days a year at 10% return

Expenses are Relative

Going back to Bezos, Amazon's expenses topped $300 billion in 2020. What would that company have looked like if, instead of focusing on how to bring in more revenue, Bezos focused entirely on saving a buck?

Indeed, Amazon is famous for working on ways to streamline their business, but they wouldn't have gotten where they are if they had tried to save their way there. Instead, they invested in creating one of the world's largest and most efficient distribution systems. Successful business owners look for ways to invest cash into their business to improve their returns rather than just looking for ways to save money.

Focus on Getting the Biggest Return on Your Investment to Grow

If you want to grow your business, stop trading time for money and asking how you can save a buck. Start asking how you can get the most significant return for your investment. And remember, sometimes simple is better. A few products people want to buy is often all you need to have a successful business.

Why Simple Is Better When It Comes to Business

About the Author 

Don Smith

Happily married with five kids, Smith owns a technology company, is the founder of this site, has served on the board of directors for multiple companies, and loves playing soccer, hiking, and mentoring.

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