Minimizing Expenses or Maximizing Profits?

On a recent business trip to Washington, DC, we used lots of Uber and Lyft rides. When we asked the drivers about their costs, the economics were interesting.

  1. “I pay $25 per day in fuel.” He was driving an older Toyota Camry. Question: how high are your operating expenses?
  2. “I pay $40 per week in fuel.” He was driving a new hybrid Honda Civic. Question: how low could your operating expenses be with newer technology or equipment?

Let’s do the math (hint: always do the math on any problem).

One pays $40 per week or $160 per month for fuel and is driving a new and comfortable car. The other pays $25 per day, or $750 per month for fuel driving an older, less comfortable, more worn out car.

The difference is $590 per month. For less than $590 per month, we could buy/lease/finance a newer vehicle that burned less fuel, had fewer repairs, and was more comfortable. And, we’d have more profit.

In your business, are you minimizing expenses or optimizing profits?

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