Misdirected Frugality

They tend to focus on the minute and relatively unimportant things while ignoring the more critical items that need attention. They can get so caught up in watching pennies in certain areas that they actually cost the business more than they save. An example is the owner who felt he was doing his job well by having employees comes to him to get office supplies in order to control expenses. He actually spent time counting paper clips and rummaged through garbage cans pulling out paper that could be reused. He spent an inordinate amount of time focusing on things that just weren't going to make a huge difference in his bottom line. Also, he drove the employees crazy by coming by regularly to look over their desks to make certain they weren't overusing supplies. And all the while, there were big chunks of money going down the drain in the areas of productivity, purchasing and more significant line items. This is clearly an example of misdirected frugality. When focusing on expenses, it is important to look at all expenses with an eye toward reasonable levels of spending that facilitates effective business practices and company growth. Avoid becoming so focused on pennies when dollars are flying out the window.

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