Outlawing the Word “Write-off”
A group of my peers was recently discussing a blog post written by another service provider, encouraging business owners to spend as much as possible and decrease revenue as the year wraps up. Here’s my professional opinion on that advice: What a Load of Crap!
Yes, we all want to pay the least amount of taxes possible, but wouldn’t you rather have after-tax cash than no cash at all? Making business decisions solely to save on taxes is never a good strategy. As my CFO friend Philip Campbell says, “The term write-off turns smart people into horrible decision-makers.”
The Myth of Spending to Save on Taxes
The idea of spending money just to reduce taxes may sound appealing, but it’s flawed. Why? Because every dollar you spend reduces your cash flow. Sure, you might get a tax deduction, but that deduction is only a percentage of your spending. The rest comes out of your pocket.
In other words: Don’t throw away $1 to save 30 cents.
Why After-Tax Cash Matters More
Cash is the lifeblood of your business. Having after-tax cash allows you to:
- Reinforce your financial stability.
- Invest in meaningful growth opportunities.
- Navigate unexpected expenses with confidence.
Spending recklessly at year-end can leave you cash-strapped and unable to act when it matters most.
How to Make Smart Spending Decisions
Here’s my free advice (and it’s worth what you paid for it): Make spending decisions based on operations and strategy—not taxes. Before making a purchase, ask yourself:
- Will this make my business more profitable?
- Will it improve efficiency?
- Does it align with my quarterly priorities, annual goals, or 3-year vision?
If the answer is “no,” don’t make the purchase.
Plan Ahead: Setting Business Goals
If you don’t have quarterly priorities, annual goals, or a 3-year vision, now’s the time to start. Knowing where you want your business to go is critical for making smart financial decisions. Without clear goals, you’re just guessing.
Take Control of Your Spending
The word “write-off” can lead even the smartest business owners to make poor decisions. Instead of falling into that trap, focus on building a strong operational foundation and aligning your spending with your goals.
Need help setting priorities or figuring out where to take your business? Contact us today, and let’s plan for success!