You're familiar with the concept of scarcity mentality, right?
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The toilet paper story was the single most memorable lesson of banking school. Yes, Dr. Seifried, twenty-five years later it's still locked in the brain. That's the story about how mindset creates reality. In Dr. Seifried's tall tale, while taking his grandma to the grocery store he demonstrates his prowess as an economist by giving her the inside scoop: economic indicators tell him that there is going to be a toilet paper shortage. He's joking, but since he's her beloved grandson and the economic expert, she believes him. Shocked and worried, she stocks up, filling her cart with toilet paper. After returning home from the store, his grandma jumps right on the telephone and tells all of her friends that there's going to be a toilet paper shortage. As a result, all of her friends stock up on toilet paper too, creating in her local grocery stores guess what - a shortage of toilet paper!
Some cost-averse, scarcity-minded companies make across-the-board cuts and/or freezes without analyzing thoroughly which cash outlays are warranted and which are not. Expenses and investments are two different animals. An expense is gone when it's gone. An investment generates a return. Both temporarily reduce the number of dollars in the wallet, but an investment replenishes itself, and when it's really good the return will be in larger denominations than the original expenditure.
Savvy business owners know that cash is king, and that mindfulness about spending contributes to success and sustainability. Good businesses want to create value for customers at the lowest possible cost. But there are some business owners out there who cut some of the meat along with the fat, in businesses where there is more productivity to be gained and/or better process efficiency. It's sound business practice to prioritize creativity over capital in searching for solutions, but sometimes an investment of capital is exactly what the situation needs.
Ask yourself these questions when you're faced with an opportunity to part with your hard-earned cash:
Even when business conditions are improving the toilet paper mindset can linger on, hampering your business's ability to capitalize on opportunities. Do you want toilet paper mindset to choke your business's growth? Of course you don't. So take one extra package if you must, but put the rest of the toilet paper back on the shelf.