Business By Hormozi #176: How a Formerly Expensive Thing Becomes a Rounding Error

Introduction: The Shift in Perspective

In the early days of their friendship, Michael and Lara had vastly different views on money and investments. Michael was an ambitious entrepreneur who had recently launched a startup, while Lara was an experienced investor who had spent years working in finance. One day, over lunch, they began discussing how their perspectives on value had changed over time.

Michael’s Struggle: The Burden of Expensive Investments

Michael had recently made a significant purchase for his business—a new software system that cost him a fortune. At the time, it seemed like the most important investment he could make for the future success of his company. He had spent sleepless nights debating whether it was worth the cost, but finally, he convinced himself that this investment would bring his startup to the next level. Despite the steep price, Michael was optimistic about its potential return on investment.

Lara’s Insight: The Impact of Time on Value

Lara, on the other hand, had a different outlook. She had seen countless companies and investments grow and evolve over time. "You know, Michael," she said, "I’ve seen this happen many times before. In the long run, what seems like an expensive investment today will eventually become a rounding error in your books."

Michael looked at her in confusion. "What do you mean?"

Lara smiled and explained, "The thing you're stressing over today—whether it’s a new software, equipment, or even a business decision—will eventually pale in comparison to the bigger picture. As your company grows and your revenue increases, what once felt like a huge expense will become insignificant, just a rounding error in the grand scheme of things."

The Turning Point: A Shift in Thinking

Over time, Michael began to see Lara’s point. His company had grown, and the initial investment that had seemed so large was now a small part of his total budget. The stress and anxiety he had felt when making that purchase slowly faded away. What seemed like a big financial risk had become just another line item in his books.

The Lesson: Shifting Focus from Immediate Expense to Long-Term Growth

The moral of the story? When you invest with a long-term vision in mind, what seems like an expensive thing today may become a rounding error tomorrow. The key is to focus on growth, understanding that the true value of an investment is seen over time, not in the immediate aftermath.

Why Long-Term Thinking Matters in Business

Lara’s wisdom helped Michael realize that the true value of investments isn’t always apparent in the short term. By focusing on the bigger picture and thinking about the long-term benefits, you can make decisions that will pay off far beyond their initial cost. What feels like a significant expense today can eventually fade into the background as your business grows.

Conclusion: The Power of Long-Term Investment

In the world of business, it’s crucial to keep a long-term perspective. While some investments may seem daunting or expensive at first, over time, they can become insignificant in comparison to the success and growth of your company. Stay focused on the bigger picture, and what once seemed like a major expense will eventually be a small number in the grand scheme of things.