If you find yourself in a situation where you have to scale down,
remember it is okay not to be able to afford the things you used to.
Don’t let your choices be influenced by what other people think. PHOTO|
FILE
Today, I want us to look at some scenarios where our choices to
spend money on things we can no longer afford are influenced by what
other people think.
Here’s the first one: Two large and
well-known companies have just announced their financial results.
Company A has made profits in billions and Company B has made losses in
billions.
They both announce their results at an
expensive upmarket hotel. They probably both spend the same amount of
money buying their invited guests breakfast at this hotel.
In
scenario two, Leo, a mid-level bank manager sees his CEO driving a new
Touareg. He aspires to be like him and to have what the CEO has. Six
months later he takes a car loan to buy a Touareg.
Everybody
in the bank is talking about his new car and the fact that he has the
same car as the CEO. Another six months later he has to take more loans
to maintain the car.
In the third
scenario, Mildred, an advertising executive is made redundant at work.
Club membership was part of her benefits when she was working. Her
employer covered her subscriptions every quarter.
She
is now struggling to pay them from her savings even though the option
of deferring membership until she is back on her feet is available.
DIFFERENT CIRCUMSTANCES
And
in the fourth scenario, times have been tough this year for Steve.
Every year he holds a Christmas party out of town for his employees. He
is considering taking a personal loan so that the company can still have
a Christmas party.
Looking at the
above scenarios very logically, the company that made profits can afford
that expense, but the company that made losses cannot afford it.
The
CEO of the bank can afford to buy a Touareg. In fact, most likely he
does not even pay for it himself, and if he is indeed paying for it, the
costs of maintaining that car are a minor fraction of his income.
On
the other hand, Leo is now facing a monthly loan repayment that eats
into a huge chunk of his income and this is notwithstanding the
maintenance costs of the car. Mildred can no longer afford the
subscriptions.
The more she spends
her savings on things that are absolutely not necessary at this point,
the faster she finds herself in a position where she will not even be
able to afford the necessities.
Steve, the businessman, cannot afford that party this year. Taking a personal loan to finance it just expounds his problems.
When you look at the people above, the choices they should have made seem like a no-brainer.
NO LONGER AFFORD CERTAIN THINGS
However,
if we are honest with ourselves, we will admit that like many of the
people above, we have challenges admitting to ourselves that we can no
longer afford certain things.
We have
problems scaling down expenditure when we have to, but there is a
thought process that can help you scale down when you need to. Firstly,
we have to know that we will not want to scale down even though we have
to. You will not feel happy or comfortable about scaling down.
You
will feel bad. But guess what? You can feel bad, but still do the
logical thing. Don’t wait to feel good about the choices you have to
make.
Secondly, other people are not
thinking about it as much as you think they are. Believe it or not,
people have better things to do than have committee-type discussions
about why you are not at the club.
Yes, they may talk about it for a short while but you will not make headline news that long.
The
scenario that is keeping Mildred suffering through paying her
subscriptions is far much worse in her head than it actually is. She is
probably imagining all sorts of things that in reality are not
happening.
The other thing is that
the people who truly matter will respect you more if you make choices
that show you are actually dealing with the situation, that you are on
top of things rather than being in denial of what is truly happening.
CONCERNED ABOUT FUTURE PROSPECTS
If
I was a shareholder in Company B, as much as I am concerned about
future prospects of the company, it would give me some comfort if I saw
management making an attempt to manage costs.
Having
a briefing at a high-end hotel just doesn’t give me that confidence.
I’m worried about losing my money not the food. It makes me think that
you do not have the guts to cope with the situation.
If
I worked with Steve, I would learn true leadership lessons with him if I
saw him making the hard choices and openly talk to his team about the
situation at hand.
We also need to
know we will not die if we scale down. We are fundamentally the same
people irrespective of which car we drive and irrespective of any
temporary challenges we face.
Even
though Leo buys the car that his CEO drives, it does not make him a CEO.
There are reasons that people do become CEO’s that have nothing to do
with the car they drive.
Also even
though the CEO loses his or her job today, they have not lost the
character attributes that got them into leadership positions.
Leo
should aspire to those attributes more than the car. Last but not
least, we can still do the important activities even if we scale down.
Steve can have a simple lunch in the office; that way, the objective of
bringing people together to celebrate or discuss the year is still met.
Company B can still find an economic way to explain their results to key
stakeholders.
Mildred is not losing
her membership. Leo can still buy a car. It just doesn’t have to be the
same one that the CEO drives. Many times objectives can still be
fulfilled, just with a different wrapping.
So
if you face a situation that requires you to scale down, remember it is
OK not to be able to afford it. That does not define you. What does is
your response to it. Be courageous enough to become uncomfortable.
Don’t let your emotions rule you and don’t let choices be influenced by what other people think.
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