The High Price of Being Cheap: How Being Selfish Can Ruin Your Business

High Price of Being Cheap

Nobody likes cheap people. Just yesterday, I tipped a porter at the airport only a dollar for handling one small piece of luggage. My rationalization was, “It’s only a small bag.” And although he seemed OK with my one-dollar tip, I felt terrible because I felt cheap. But being cheap is not only shameful and embarrassing in social settings, it can be absolutely detrimental when conducting business.

We all know cheap rich people. I have one friend in particular who is extremely wealthy…and extremely cheap. He is so cheap, it’s often comical. Two years ago, he and his wife hosted a party for a few friends where they shared stories and pictures from their dream vacation to Italy. The couple raved on and on about their luxurious trip: the sumptuous meals, picturesque vineyards, and the fine wines they discovered. We all shared a few bottles of their “new favorite wine” from their “new favorite vineyard” (which was quite good).

At the end of the evening, guests were each given a bottle of the storied vino as a gift. My wife Kim and I thought it was very generous of them to transport their special wine all the way from Italy and to give us each a bottle. When we got home, Kim — somewhat of a wine connoisseur — turned the bottle upside down and found a U.S. big-box price sticker on the bottom. The Price? $6.99. Now, my mother taught me long ago that, “It’s not the gift that counts, but the thought behind it,”  but after we stopped laughing, we couldn’t help but wonder what the “thought” really was.

I realized they did not have to give us anything. We have enjoyed their company and friendship for years, so the bottle of wine was quite unnecessary. I did my best to remind myself that “it’s the thought that counts.” My problem was I had a difficult time finding pleasant thoughts about my rich (but cheap) friend. I still love him, but miserly moments like that one scar my memory…and make me not want to do business with him. A successful person should never be cheap in any circumstance, but especially when they are dealing with potential business partners.

Kindness and Generosity

Remember the viral video clip of a passenger being forcibly dragged off a United Airlines flight? The sight of this passenger, a renowned medical doctor, being dragged down the aisle and then hiding behind airline curtains with a bloody mouth was catastrophic negative press for the airline. Even worse, with his insensitive reaction, United CEO Oscar Munoz only escalated the situation and turned it into a full-blown PR nightmare. It’s frustrating because simple respect and generosity may have delivered a totally different outcome (or possibly even circumvented the disaster completely).

Let this be a lesson to all CEOs on how not to conduct business. As prominent business people, we are all going to be faced with crises (PR and otherwise), at one point or another. It’s inevitable. But if we learn to handle them with grace and generosity, we can weather the storm and gain people’s respect in the process. Remember when Walmart gave all their employees raises? I bet some cheap people on the board hated the idea. They were probably thinking solely about their bottom line. But not only was it the right thing to do for their workers, it ended up improving their stock price, employee morale, and public perception. Kindness and Generosity always pay dividends.

Give…and You Shall Receive

My mom also taught me that “If you are pointing one finger forward, three fingers are pointing back at you.” It dawned on me that I could be generous if I listened more and talked less. Eventually, I would apply this to my professional life. We all appreciate people who listen to us. The next time you are conducting business, make sure you are actually listening to the people you are working with. Make sure you’re not just waiting your turn to talk and trying and close the deal without actually understanding the person and their needs.

In Sunday school I was taught, “Give and you shall receive.” I have found this works in business as well as in life. I have found that the more I give, the more money drops to the bottom line. In 2002, the real estate market here in Phoenix (where I live) was not just hot, it was simmering. Most properties were being sold before they were even listed for sale.

In large commercial real estate transactions, the first dollars to be cut often come from the real estate agent’s commission. Many times, the real estate broker is the first casualty — sometimes cut out of the deal entirely. I took the opposite strategy. In 2002, I went to the number-one broker in Phoenix and instead of cutting his commission, I offered him a raise. My offer was a ten percent commission (rather than six), plus ten percent ownership in the property. In other words, I wanted him to become my partner, not just my broker. I know this sounds foolish to most “cheap” real estate investors — especially investors who think they’re being smart screwing the real estate agent — but I knew better.

Being generous to the best real estate agent in Phoenix ended up paying off handsomely to the tune of tens of millions of dollars. Immediately, the best deals came to us. While most competing real estate investors were working up a sweat, spending days beating the bushes looking for the best deals, the best deals were falling on our laps. Kim, myself, and our agent partner have made much more money being generous than we would have if we were greedy and cheap.

Remember this when you are doing business. Remember that instead of looking solely at a one-time payout, you are building relationships that could be exponentially more beneficial for decades to come. So often, deals get torpedoed by egos. There is an old saying that I’m sure you’ve heard: “Would you rather have ninety percent of a million dollars or a hundred percent of nothing?” Most people choose the latter. They want it all. That’s the price for being cheap.

About The Author

Best known as the author of Rich Dad Poor Dad - the No. 1 personal finance book of all time - Robert Kiyosaki has challenged and changed the way tens of millions of people around the world think about money. He is an entrepreneur, educator and investor who believes the world needs more entrepreneurs. With perspectives on money and investing that often contradict conventional wisdom, Kiyosaki has earned an international reputation for straight talk, irreverence and courage, and has become a passionate and outspoken advocate for financial education. His most recent books include Unfair Advantage: What Schools Will Never Teach You About Money and Midas Touch, the second book he has co-authored with Donald Trump. To learn more visit today. For editorial consideration please contact editor@jetsetmag(dot)com.

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