Download Center

Find an Inspector

Register Software

Tips for Success

You Get What You Pay For ...  Or, Do you?

In business the name of the game is efficiency. You have limited resources. The goal is to get the maximum possible value and effectiveness from all your resources.  Our two most important resources are time and money.

There is a point at which committing additional resources will either no longer result in improved effectiveness or the improvement will be marginal.  This is called the "Law of diminishing returns".  The law of diminishing returns affects every aspect of business. 

Let's say for example, you find that increasing the amount you spend on Yellow Pages advertising, results in a corresponding increase in the number of calls so you continue to increase your budget.  There will be a point at which it costs much more to get a very small increase in effectiveness.  You will reach a point at which each extra dollar you spend on advertising no longer results in an increase in the number of calls you get.

Many people firmly believe that if they spend more, they will get more.  Not only do they believe that they will get more, they believe that each additional dollar they spend will bring a full dollar's worth of value, that is, a dollar's worth of effectiveness.  Some even believe that additional dollars spent will disproportionately improve effectiveness.

There was a time, not all that long ago, when you usually would get what you paid for.  The question of whether or not companies could use marketing to create an artificial demand has been a long standing debate.  It has become obvious in recent years that companies can create artificial demand.

There are some people who always have to have the best available or everything, regardless of cost or effectiveness.  These are the status seekers. 

Even in instances where you are getting more for your dollars, you need to ask yourself, "Do I need this in order to run my business effectively and efficiently?" 

Years ago, I was involved in a project in which we were designing and installing custom electrical switchgear.  I felt that we needed to make some modifications to the design of the switchgear.  I knew it could be better than the way it had been designed.  The fellow who owned the company that was going to build the equipment (he didn't design it) and I were talking about my proposed modifications.  He said that while he agreed with me that the design could have been improved upon, the modifications would provide very little benefit.  When he said next has stayed with me since that day.  He said "infinite precision comes at infinite cost".  For me, the light came on.  More is not always better.  On that project, like every project, we had a finite amount of money to spend.  We could better spend our money elsewhere.  The overall result was a better system than it would have been had we allocated additional funds to make the switchgear modifications I had wanted.  These are exactly the types of decisions we have to make with our businesses almost every day.

Most of us, most of the time, want the things that bring the best value to our business.  We like to think that we are savvy and prudent when it comes to business investments but the marketing people are much sharper than we give them credit for.  No one likes to believe that their behavior is predictable but the reality is that we are predictable.  The best marketing people are the ones who predict the path we are going down and putting their products squarely in our path.

We underwent a major cultural shift in the late 1970s and throughout the 1980s.  The emphasis went from being functional to stylish.  That is not to say that style had not previously been important. Make no mistake about it, style has always been important.  The difference is that function was historically put before style.  Today, function almost always takes a back seat to style.  A common product that exemplifies what I am talking about is vacuum cleaners.  Yes - vacuum cleaners.  Modern vacuum cleaners have short life spans, they are disposable and their performance is woefully lacking compared to the vacuum cleaners of the past.  But - they sure look impressive.  The typical vacuum cleaner today looks like something straight out of Star Wars.

The median age of home inspectors is approximately 52 years.  A large number of home inspectors are in their late 50s and in 60s.  That means that most of us grew up and came of age in a time when you were only as good as your word, we believe that doing the right thing is its own reward.  We believe in giving more than we take.  These are all reasons that we can be proud of our profession.  Older inspectors influence younger inspectors in positive ways by passing on our values; our work ethics.

The problem is that we have to recognize that we are easy prey for the companies that try to pass off products and services that are not what they should be.  They understand that the belief is deeply ingrained in us that "we get what we pay for".

When I decided to write this article, my first thought was to lay out in front of you a list of products and services that provide little or no real value to home inspectors and those that are essential to the business but do not provide a good value.

There are two reasons I decided against making a list.  One is that it would anger a lot of people.  I don't care about angering those who are outright trying to defraud us by selling snake oil remedies.  There are many people in this industry that have products and services that really do not bring a whole lot of benefit to us.  However, they truly believe that they have something of value.  you should make up your own mind.  Perhaps you will see value where I do not.  It could very well be that I am the one who is missing out on a product or service that could bring real value to my business.

My goal is not to steer you in the direction of any particular product or service or to steer you away from any particular product or service.  My hope is to help you to develop a healthy skepticism.  You don't always get what you pay for.  Look at every product or service entirely on its merits.  Look at products and services logically and with some skepticism.  Ask yourself whether the price is in line with the benefits.  Do you really need the benefits?  In other words, they may be legitimate but do they benefit you and your business?

George Wells

Did You Know ...

Businesses that are started during a recession or a depression are much more likely to succeed in the long run than businesses that start during good economic times?  That may seem counter intuitive but it is true.  Businesses that start during the good times almost always have business practices that work well enough when work is plentiful but do not work as well, or not at all, in a more competitive economy.

Businesses owners who start businesses in a difficult business climate naturally look for ways to do things that will improve their likelihood of success. Then, during good economic times, they tend to continue with their more highly refined business practices.
 

Business owners who started their businesses during good economic times have a hard time understanding which of their practices are putting them in a weak competitive position.  When those practices are pointed out to them, the tendency is to think "There is nothing wrong with that. I built my business doing that".
 

Times change.  The older we get, the more likely we are to have difficulty keeping up with the changes.  We want to believe that the things we are doing are the best things to be doing.  You are comfortable with the way you do things.  It is only natural to want to stay within your comfort zone.  You need to look at all the things you do and ask the question "Is this helping my business".  You need to be willing and able to step outside your comfort zone.