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Tuesday, January 22, 2008

Small Money makes Big Money

Thanks to Ma’afu (David) Wendt for this. We were having a meeting for Hawaii Youth Rugby over dinner when Ma’afu told us about how a former boss long ago told him that “small money makes big money”.

We’re all looking for the big payoff, the big win, but business usually doesn’t work that way. It’s usually slow and steady, incremental gains over time. It takes hard work and dedication, but the chances for success are greater.

If you’re a service provider, like me, you dream of that big client that will give you a lucrative, long-term contract. You can then spend all your energy on that one job. But that’s rare. It’s usually a steady stream of smaller clients and smaller jobs. That takes a lot more work. You have to keep track of all the jobs and all the clients. You have to schedule your time and move from place to place. Instead of tracking one job and preparing one invoice, you have to track and prepare many. And you’re constantly working to develop new clients and maintain your relationship with all your existing clients. It’s hard work and it takes commitment and dedication. But the odds of success are greater. For one, if you lose one client or finish one job, you have others already in place. If you lose that one big client or that one big job ends, you’ll have to start over with building relationships and signing up new clients. Small money makes big money, over time.

Another way to look at this is with cost savings. Again, we’re always looking for the big fix, the big saving, that one big cut that solves all our problems. But that’s even rarer than the big win. It’s just not as simple as finding a hole in the ground that’s mysteriously sucking up all your money. It’s a lot of little things. A process that doesn’t perform as effectively as it should. Mistakes that require you to fix, or rework, something you’ve already done. Misplaced paperwork that delays a delivery. Fix the little things and they’ll add up to something big. Make something that works well work better, a little bit at a time. Small savings make big savings is the same as small money makes big money.

There’s nothing wrong with trying for the big payoff or the big savings, keep trying. Just don’t overlook the small money. Work on the small money while you’re working on the big money, and maybe you’ll have both.

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