Company's cheapness may be key to success

Filed in archive How-to on July 3, 2006

I want to thank Jeff Cornwall for another great link about the role "cheapness" (let's call it leanness) can play in a company's success.

Jeff calls it an example of how bootstrapping culture looks even at large, successful, established firms.

For example, Winona, MN, nuts and bolts distributor fastenal saves money by not offering 401 (k) plans, refusing to pay meal per diems for business trips and even refusing to carry collision protection on its fleet of 1,100 pick-up trucks.

RightNow Technologies CEO and bootstrapper Greg Gianforte told Forbes.com Video Network entrepreneur editor Brett Nelson his company refused to spend $30,000 to $40,000 on a telephone switcher when starting out, bought e-machines at Costco for his employees and even paid his kids $5 a piece to assemble office furniture.

Experts insist a frugal business ethic should not be confused with stinginess and may not be the panacea for success. However, examining how even some larger companies seek to control costs can be a good reference point when considering how a start-up can decide what expenses are necessary and what costs can be avoided all together.