Small changes can make a big improvement in your life or in your business. While sometimes major changes may be warranted, even small changes can make a large cumulative effect over time.
If, instead of spending $5 on a cup of coffee on your way to work each morning, you save that money and invest it. If you invested the $100 each month at an 8% rate of return you would have $57,266 after 20 years. If you were able to cut back a little more and save $15 a day and invest it, the amount would grow to $171,798. This is more than the majority of people have in their retirement accounts when they retire. Small changes can make a big difference.
Suppose that you own a company that has gross revenue of $500,000, expenses of $400,000, and net income of $100,000. You have been drifting at about this level for the last five years or so. You are doing OK, but you want to do better. If you can make a few small changes that will increase your revenue by just 5% and cut your expenses by 2%, you will add $33,000 to your bottom line. After trimming your expenses as much as you can, it is probably not realistic to expect your expenses to go down year after year. In year 3 if you have another 5% increase in revenue and hold your expenses to a 3% increase, your net income would be $147,490. At these same rates of growth, in year 7 your net income would have more than doubled to $215,612. This is a life-changing increase that resulted from small changes. As we know, life and business do not usually move in straight lines like this hypothetical. We have ups and downs. But we want to be moving in an upward trajectory, not stuck in place.
Think of three things that you can do to increase the revenue of your business. When was the last time that you raised your prices? If it has been over a year, that is something to consider. You can add new products and services. You can add new customers. If you don’t own a business, what are some things that you could do to earn a little more money?
On the expense side, think of three ways that you can cut expenses. What changes can you make to your business to run it more efficiently? Is there an employee that is not pulling his weight? Can you buy your supplies at a better price somewhere else? If you don’t own a business, what are some household expenses that could be cut to save money?
Small changes can make a big difference.