Being Generous Can Kill Your Small Business

Most of us were raised to be good people, to be kind to others and to be generous. No one, individual or business, wants to be called a Scrooge.  But there can be a downside to being “too nice.”  I am not advocating that you stop treating people fairly.  I just ask you to think about the situation below, how you behave and how it might be eating away at your profit.

Nip Bad Employee Behavior in the Bud

Overlooking employee “misbehavior” is a costly way to “nice” yourself out of business.  Excessive time on the phone, sneaking food, taking products home, or having a negative attitude – all of these behaviors can be costly in terms of productivity and profit.  In a smaller company, often with no HR person to be the “heavy” and where you may well be dealing with relatives, you may hate to have to warn and potentially fire employees.   But chances are the other employees are well aware of the situation and tired of picking up the slack for the problem employee.  Dealing with the situation will benefit your small business in the long run.

Avoid Project Creep

Especially if you are in a service business, you may bid on a project, set the price and parameters, and still the client comes back and says, “Can you change this one little thing”?  While you do not want to “nickel and dime” people, if you constantly give your time away free, you will cut into your profits.  Try to think of the concept of “ lost opportunity” – what else could you have done  if you were not giving your time away free or doing tasks you could delegate to someone else?  Would it have been of more benefit to the business? There is no magic answer.  You have to decide for yourself when to draw “the line.”

I’d love to hear your thoughts. Do you have examples of when you have been overly nice?

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