Cut Expenses to Increase Profits
I‘m always on the lookout for articles with the potential to positively change a business. What’s your take on the following points I came across recently?
Most business owners think that in order to improve their business or reach that next level, they have to raise revenue. And, while raising revenue is a great way to improve your business, it is not the only way. Proper financial management is not just about revenue generation and raising capital but can also be positively impacted through managed spending and cost controls. To be in business means to be in the business of making money. Thus, the goal is to realize the greatest return for the time and capital you invest in your business. Now, it does take money to make money and that is why businesses should spend – especially on items that generate more business than they cost.
The first thing that should come to any business owner’s mind is what return they would expect from their purchase (their spending). To grow your business, you spend money on production, marketing, equipment and other overheads but you must also understand how that spending will return the amount you spent (recover its cost) as well as provide additional revenue (profit) – profit that can be plowed back into the firm to once again generate more business thorough additional spending.
Think about it this way – you don’t go out and buy a fax machine for your office and just let it sit there collecting dust. You want to make that asset work for you. Either by improving your revenue (i.e. getting orders faster or sending invoices faster so that you can be paid sooner) or save your time (time is money) by improving your operations or not having to drive down somewhere to fax documents. Money is also an asset that should be put to work and not just left to collect dust or wasted on projects that do not bring in more revenue than they cost.
I’d be really interested to know your opinion. Check out the full article here and then I’d be happy to discuss with you by phone (0469) 310 2971 or email [email protected]
Cheers,
Michael