During difficult times, you need to focus on ways to cut cost and boost your bottom line. It’s important to recognize that, for every dollar that your company spends, you will have to make $10.00 - $20.00 of revenue to make up for it. With such high overhead cost, few companies yield more than a 10% profit margin, often much less. Therefore, $1.00 in revenue is certainly not $1.00 in profit. It often takes $10.00 - $20.00 of revenue or more to actually make $1.00. The fastest way to significantly impact your company’s bottom line profitability may not to be to generate more revenue; it’s to cut cost. If I was to provide you with a magic formula, I would say there are 9 ways to cut cost and boost your bottom line;
1. Negotiate everything– always try to get a lower price. When you positively cannot get the price any lower, ask for freebees.
2. Eliminate small, needless expenses.It’s easy to blow $5.00 or $10.00 without thinking about it. The biggest culprit; office supplies. Make sure that your employees get everything they need, but not everything they want.
3. Pay your bills on time– delaying payment only aggravates vendors, plus you avoid finance charges and late fees.
4. Beware of expense accounts.It’s one thing to take a customer out for dinner; it’s another to spend $1,000 doing it. Set limits so your employees know their boundaries! For your sales people, many companies today don’t permit reimbursement of alcoholic beverages.
5. Cut down on mistakes– lawsuits, refunds, missed deadlines, reprints and angry customers can result in high cost and lost revenue.
6. Do it yourself! Sometimes, it’s much less expensive for your company to do a task that you would normally outsource.However, you must weigh the pros and cons. I’m a firm believer in outsourcing anything that you’re not good at.
7. Create a budget– it’s amazing how many companies still don’t use a budget.
8. Spend where it counts.Did you know that it can cost 10 times as much money (and time) to get a new customer than it would to keep the one you have?
9. Look out for rising prices– whether it be a fuel supplier, office supplier, or any vendor; keep reviewing the invoices. Tell your suppliers to always let you know when prices change. Have your accounting team put flags in place for all major products you buy so you know if they increase dramatically
1. Negotiate everything– always try to get a lower price. When you positively cannot get the price any lower, ask for freebees.
2. Eliminate small, needless expenses.It’s easy to blow $5.00 or $10.00 without thinking about it. The biggest culprit; office supplies. Make sure that your employees get everything they need, but not everything they want.
3. Pay your bills on time– delaying payment only aggravates vendors, plus you avoid finance charges and late fees.
4. Beware of expense accounts.It’s one thing to take a customer out for dinner; it’s another to spend $1,000 doing it. Set limits so your employees know their boundaries! For your sales people, many companies today don’t permit reimbursement of alcoholic beverages.
5. Cut down on mistakes– lawsuits, refunds, missed deadlines, reprints and angry customers can result in high cost and lost revenue.
6. Do it yourself! Sometimes, it’s much less expensive for your company to do a task that you would normally outsource.However, you must weigh the pros and cons. I’m a firm believer in outsourcing anything that you’re not good at.
7. Create a budget– it’s amazing how many companies still don’t use a budget.
8. Spend where it counts.Did you know that it can cost 10 times as much money (and time) to get a new customer than it would to keep the one you have?
9. Look out for rising prices– whether it be a fuel supplier, office supplier, or any vendor; keep reviewing the invoices. Tell your suppliers to always let you know when prices change. Have your accounting team put flags in place for all major products you buy so you know if they increase dramatically