You own your business. You the owner are really strong in some areas. You may have a knack for sales or are very creative in designing products or services. These may be the reason you saw the need and got into the business in the first place.

Yet you the owner may be weak in some other areas. You never got trained there. You do not have much experience. You may not get marketing or understand information technology. It is a bit of magic or a black box to you.

This can play out in operating expenses in several ways not to your benefit:

· You have your pets. You love to spend money there when you can. You feel very rosy about any projects that come up here. It is like someone who goes out and buys a neat new tool from the hardware store, that they may only use once a year and is way beyond what they needed.

You may for example, be very visionary and very enamored about information technology. You see the power of the Internet. You pour a lot of money into it. You spend more than you should and miss out on less expensive ways to do the same thing. You put dollars into projects that you are very unlikely to benefit fully from.

· You overcompensate. You do not know much in an area. Someone comes up with a proposal. It all sounds very good to you. It is hard for you to judge. You know you should spend money in this area, so you go ahead. You do not realize you just spent way too much.

For example, in information technology, you go out and get a much more elaborate computer system than you really needed. You did it with a good heart since you wanted a powerful system for your employees. However, you paid too much up front. You pay too much ongoing too, as it turns out to be too hard to operate.

· You have your orphans. Rather than overcompensate, you starve it. If you do not understand it, you do not spend money on it. Or you have some biases against spending money there. It is good to have discernment, but it can go too far. You are not going to be able to know all things well. Sometimes you are just going to have to rely on other’s judgment and your gut. Try as you might, your head might not be able to pick it up.

Usually, for example, one of the last areas owners want to put money into is accounting. You want to have a lean accounting department. You can say that the extra accountant is not going to add one more dollar of revenues. You would rather spend the money on new production equipment or in marketing. Yet sometimes accounting is kept too tight. Work does not get done or gets done too late. Your reports come out later or are wrong. Hidden costs pile up that you do not see until much later, like allowance adjustments to customers, less oversight on operating costs or sales tax issues.

You end up spending too much money in some areas. And sometimes spend too little in a few others.


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