Expenses vs Investments

It’s easy to look at something that costs you money as an expense. Buying paper clips for your office is an expense. It’s important to determine what are expenses vs what are really investments.

If you hire a salesperson who costs $X a year and that salesperson generates five times that much in profit, was that an expense or an investment? (I’m not referring to true accounting terms here, rather real business terms).

If you open a new store and it allows you to make a significantly higher profit, is that rent an expense or an investment?

It’s ok to look to cut expenses but make sure you aren’t cutting investments that can generate significant profits as well.

Have a great day!

Lawrence

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