What's the difference between "investing" and "spending"? From the perspective of current cash outlays, nothing is different – yet,taking the long view, there's a great deal of difference.

To see how these concepts played out in our project for this client, please visit Improving Pharmacists' Productivity by 400%.


It's hard, running a small business. If you're growing, your cash flow is tight because your cash hasn't caught up with your growth – if you're shrinking, your cash flow is tight for different reasons.

In a small business, it's hard to find that "sweet spot" – where you are in good control over your business' operations, finances, and business development. This is especially true in a highly regulated and ever-changing industry like health care.

This month's case study features a client who had a triple whammy – a small business that was growing, working in the health care industry, and staring at having to comply with a new Medicare regulation in just under 2 months. Our initial task was to develop the processes and systems to ensure they would be compliant with the new regulation.

Initially, it seemed this would be a "one and done" client – deliver this single project (which we did) and that would be it. Instead, additional requests kept coming, all with the objective of making the business run better and be more controllable.

To me, that first project was "spending" – throwing money at a problem to make it go away. Yet, the later projects turned to "investing," since all the projects built on top of each other, thanks to the foresight of our Senior Consultant on this client.

This month's case study is about one of those later projects, improving the productivity of our client's pharmacists. We estimate the cost of this project paid for itself in just under two months – AND the estimated first year savings for this ONE project MORE than paid for the ENTIRE series of projects!

Remember, when you're in the middle of things, it's hard to distinguish "investing" versus "spending." Frankly, our client was skeptical about this distinction while the system was being developed, and I can't blame them – they were growing, cash was tight, and our fees just made cash tighter in the short run.

Still, in the end, the system was completed, cash stabilized, and the pharmacists' productivity is now 5 TIMES their original levels. When your most expensive resource – your pharmacists – is also your most constrained resource, you need all the productivity you can get.

How about you? What's your most expensive resource? What's your most constrained resource? How are you consciously thinking about your resources and deliberately looking for ways to improve productivity?

If you're not dealing with these questions, then you're "spending" when you should be "investing."

For everyone who's "spending" instead of "investing" – you and I really need to meet, and let's discuss ideas to improve productivity and generate some hard-dollar benefits for your business.


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Todd L. Herman