It's clearly difficult to increase revenue today, but cutting costs can be just as, or even more effective than attempting to grow the company. With a 10% net margin - if you can reduce costs by $10,000 - that's like increasing revenue $100,000. Here are twelve ideas you can implement today.
Cut Expenses
· Challenge every expense - who authorized it, is it needed, can it be reduced?
· Assume you are spending too much - never let go of this way of thinking. As soon as you do, expenses will start to sky-rocket.
· Understand cost categories: > Strategic vs. Non strategic - can you reduce costs without affecting your future. > Direct vs. Indirect - are costs driven by sales directly, or are they harder to pin down to specific products? > Fixed vs. Variable - are costs increasing your break-even or do they vary with revenue?
Budget Expenses · Take some time to really understand what you spend. Review vendors and average monthly expenses. · Categorize and drill down on expenses. · Create a monthly budget and report against it · Develop scorecards/ dashboards to maintain focus
Compare Expenses · Benchmark your expenses against high performers in the industry · Bid out your largest costs on a rotating basis
Control Expenses · Assign an expense line to an owner. · Break costs down by department and manage against department budgets. · Keep an eye on purchasing and credit cards. Make sure charges are analyzed. · Hire a B2B CFO
As noted, it's often easier to control expenses then find new revenue.
