By Ross Martin, Accountancy Director at Hive Business.
Why is it that when we fill up the car or pop out to get some bread we feel no psychological pain, yet other transactions seem like such an affront to our decency that we fight against them, often to our own detriment?
I got a text from O2 when I was on holiday saying I could use my phone and get all the same stuff I get in the UK for £1.99 a day. It was very helpful but my initial reaction was one of resentment; it just didn’t feel as though I should have to pay extra on my already substantial monthly package. It took me two days before the lovely sunshine relaxed me enough to come to my senses. On reflection, by the pool, it was a good deal — they likely had agreed reciprocal arrangements with local telecoms suppliers.
Such everyday examples of irrational bloody-mindedness abound. People go to great lengths to avoid paying for parking, for example, even if it means walking miles when a couple of quid to avoid doing so would seem like money well spent to any reasonable observer. When you’re stressed, or pressed for time, or it’s raining, or really hot, do you really want to be hunting for a space and then fast walking to get where you need to be on time?
On more than one occasion I have seen business owners do another version of this: they delay an important activity because the interest payable on the borrowing to fund it is going to be 0.5% higher than they had in mind. Other times it’s the broker’s charges that cause the slamming on of brakes.
Neither an extra 0.5% or a broker’s charges bear much resemblance to the size of the reaction they inspire. If the cost of borrowing was, god forbid, 10%, then trying to bring it down by a fifth to 8% makes some sense, but when the rate is 3.5% and you’re trying to get 0.5% off, what’s the point? On £100k that’s £500. To put it in context the Bank of England base rate is currently 0.25%. It was 7.5% in 1998 and 14.8% in 1989.
If you feel cheated by broker’s charges, how much does it cost you to shoulder the burden of additional admin as you will have to because different lenders have different protocols? Days can be expended on the paperwork — which is very important and therefore high stress — and months can go by with delays. Not even counting the average hourly fee for a dentist, say £250, consider the opportunity costs: while you wait to launch a marketing program, for example, each new patient you miss out on might be £1,000.
We see extraordinary opportunity costs coughed up the time. One common payment method is waiting to go live with a website while some final details are being debated. If the whole site is ready to go live and you and your business partners can’t decide on some wording at the bottom page 27, seriously, just go live and amend that later. It’s better than continuing to lose money via a holding page that gives visitors threadbare information for weeks on end, with no way of tracking or engaging them.
Imagine if Google charged you £1,000 for each time a searcher should have found you but didn’t. The loss would be no less but I bet you would soon have your website up and running, with an SEO program purring and an Adwords campaign tested and refined at something more than a piddling £200 per month.
The theme here seems to be about not wasting time, and time being your most precious resource. Me and my wife find our time particularly compressed nowadays with two kids, and we got into the habit of ordering the same weekly shop online from Sainsbury’s. We got to clicking “reorder” each week but when that got boring we found we struggled to set aside time to go through the list, so we moved onto something else.
It’s called HelloFresh and you pick the meals you want to eat from a menu and they send you the fresh ingredients in a box ready to be cooked. I’ve found this extra step extremely valuable and I’m sure it’s saved us both hours of work trying to decide what to cook and then what ingredients to buy. Getting that time back is so obviously worth the premium. What’s your time worth?
Get in touch on 01872 300232 or email us at hello@hivebusiness.co.uk.
